Three-Years New, These Homes Could Fall Down

Hamilton, ONWith the current softness of the real estate housing market, real estate closings are down while foreclosures continue to rise. However, for those lucky enough to remain in their homes or in a position to buy real estate (for fire sale prices in some cases), it's buyer beware—especially if the home was built during the real estate boom years.

Generally speaking, when the market is hot builders can't build the houses fast enough. That's when corners are often cut.

For two families in the City of Hamilton Ontario, near Toronto—their new homes were compromised by an unscrupulous builder, cracks in oversight by municipal inspection officials and an overburdened and apparently unresponsive new home warranty program.

Dave Prosser and Sylvia Potter bought their brand-new, two-story home on a quiet cul de sac in the City of Hamilton. However, as recently evidenced on the CBC consumer affairs program 'Marketplace,' the couple's dream home soon descended into a bad dream of nightmarish proportions.

The first sign of major trouble appeared in the basement. The steel post, serving as a support for the main beam that supported the upper floors of the home, appeared to be bowing—as if it wasn't strong enough for the job. When the concrete floor was breached to install a second support, they found water. Lots of it. After getting little satisfaction from neither the builder nor the new home warranty program managed by the province, the couple paid for engineering expertise out of their own pocket.

What they found was a veritable swimming pool under their basement floor. The couple had to hire a backhoe for the digging of a trench, to drain the water.

Their overall list of problems totaled 106—and that was just for the first year.

A few houses down, Joe and Joanne West experienced problems with their new home. Just a few months after moving in, a portion of the basement floor caved in. The builder was back to do two, what turned out to be cosmetic repairs, but the floor kept giving way. The ground underneath appeared to be sinking.

As part of their investigation, Marketplace producers secured the observations of Mike Holmes, the renowned Canadian contractor-turned-TV star who goes around re-doing shoddy contracting jobs. Mostly, his territory is confined to botched renovation work.

But this time, he found two houses that in many respects didn't even meet minimum building code. At the West home, he found the support post under the main beam in the basement was not supported by a proper footing. He also found that the roof was not properly lagged to the main structure of the home.

In the garage, after tearing away portions of black tar paper along the interior garage walls, Holmes found the backside of the brick wall. No wood sheathing, which is not only code, not having it could be dangerous. "Your house could effectively blow down," Holmes said. The home could effectively be condemned, and the West's would have to move out until the home could be fixed.

If it could even be fixed at all. The homeowner was also told that the house had been built too deep, or too low by about two feet. In theory the house would either have to be raised in order for the foundation to be raised, or torn down completely.

This, for a 3-year-old home.

Down the road, Prosser and Potter were told that beyond the thousands of dollars they had already spent on their home doing repairs, the final tally would be at least $100,000 to fix everything. And it could go higher.

Then there is the permit debacle. According to Ontario law building permits are supposed to be issued before the shovel goes into the ground. And yet for Prosser and Potter, the building permit was issued months into construction. In the case of the West home, the building permit was only issued when the buyers took possession.

In total, the CBC learned that 18 homes in total on the street in question had building permits issued after construction began—an obvious violation.

The same builder built all the homes. He was later charged with building illegally. However that doesn't answer why the requirement of timely, up-to-date building permits was allowed to fall through the cracks at the municipal level.

The builder at one point offered to buy the problem homes back from the two families, but the owners were not happy with the terms. They turned around and sued the builder.

Beyond the real estate boom, many homeowners are finding problems with even new homes, such as those outlined above. Toxic Chinese drywall is another problem, especially in Florida. Any individual with an eye on acquiring real estate would be well-advised to employ the services of an independent house inspector—even on a new house—to ensure the real estate housing is structurally sound. For far too many, a real estate closing is just the beginning of problems—for which a real estate housing lawyer is often the only viable option.