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Sale brings transition trials

February 12, 2004 1:08 am

ASHINGTON Homes' purchase of Garrett Homes of Virginia last spring has severely tested the patience of those who originally contracted with Garrett to build half-million-dollar custom homes, as well as those who have worked exclusively with Washington Homes since the buyout took place.

The situation is an example of what can happen when one builder is sold to another, and clients under contract are caught in the middle.

Since the sale, complaints ranging from long construction delays to poor workmanship and unsatisfactory service after moving in have been lodged against Washington Homes, a national, large-volume builder, from former clients of Garrett, a high-end, custom builder based in Stafford County.

Washington Homes, headquartered in Chantilly, is a Mid-Atlantic subsidiary of New Jersey-based K. Hovnanian Homes and has some 200 homes under construction in Northern Virginia on a given day. Hovnanian has been listed among Fortune magazine's "100 Fastest Growing Companies" in the nation.

A company official said it is striving to address its customers' concerns and to improve communications with them. In some cases, it has offered to return customers' money and assist with interim housing expenses.

But that is of little consequence to Sylvia and Fernando Medina, who signed with Garrett Homes of Virginia on Oct. 7, 2002, to buy a lot at Aquia Overlook. They soon contracted with Garrett to build a house to be ready by October 2003.

Midway through that period, on April 1, 2003, Andy Garrett, president of Garrett Homes of Virginia, completed the sale to Washington Homes of his residential construction interests and the subdivisions of Aquia Overlook and Seven Lakes Estates.

The problems resulting from a custom builder being bought by a production builder were compounded by a turnover of personnel, leaving clients with unfamiliar contacts.

Garrett failed to reply to numerous telephone messages, but his lawyer, H. Clark Leming of Stafford, called the sale a business decision on Garrett's part.

"There was no intent to pull the wool over anybody's eyes or deceive anybody. He is certainly entitled to consider any offer that is made to him at any time," Leming said.

He explained that building contracts generally include an assignability clause that allows a builder to sell the contract but also requires the new builder to honor the contract. The new builder may request modifications, or the client can take his business elsewhere, he said.

According to Gary Chandler, Hovnanian's vice president for southern region operations, which includes Washington Homes, there were 21 Garrett lots in the two subdivisions with either houses under construction or under contract to be built when the buyout took place.

"This is not a routine thing that we buy a custom home builder," he said. "We sat down with the homeowners early on to let them know about the transition and reviewed files with each one. We'll see if there are any improvements that could be made."

So the Medinas ushered in 2004 in the same two-bedroom apartment they rented after selling their previous Stafford County home over a year ago.

"The holidays are supposed to be a joyful time together with family," Sylvia Medina said on Dec. 26, describing a crammed family gathering. "[Christmas] shouldn't be what it was like yesterday."

She said Washington Homes has promised their house will be ready in May.

The Medinas were among those who contracted with Garrett Homes only to learn by word of mouth that the company was being sold.

Sylvia Medina said that Garrett subsequently claimed to have sent a letter explaining the sale to his clients. She and other clients said they never received it, and a request to Leming to ask Garrett to produce it was unsuccessful.

On Feb. 24, 2003, less than five weeks before the sale to Washington Homes was official, the Medinas gave Garrett Homes the second of two checks totaling $24,375 toward a home that was expected to cost about $487,500.

Although Washington Homes eventually offered them their money back, Sylvia Medina said the couple had fallen in love with the setting of their lot, and wouldn't have been able to get as much house for the money so many months later.

"We didn't want to start all over," she said.

Chandler blames the delays on getting septic permits recertified through the local health department, inclement weather, and working with unfamiliar vendors that Garrett had used.

"We've got very good, capable contractors. It's not because our trades and subs cannot build those [custom] homes. I think everyone is stretched to a certain degree," Chandler said.

Danielle and Barry Ellis faced a similar situation at Seven Lakes Estates, the central Stafford community that Washington Homes is renaming Christy Estates.

They signed a contract with Garrett Homes on Oct. 2, 2002, and expected to close last June on their new $450,000 home sitting on 3.8 acres. After six months of delays, they moved in on Dec. 16.

Back in March, she said, Garrett's office stopped returning phone calls. "We never, ever, not once ever heard from Garrett again."

Then Washington Homes contacted them in April, saying they could expect their house in September, and then Thanksgiving, Danielle Ellis said.

Finally, a Dec. 10 closing was set. Then that was postponed one more week.

A day before closing they learned they would be required, before closing could proceed, to sign a confidentiality agreement that would prevent them from talking to the media. They paid their lawyer to join them at closing and the document was withdrawn.

Chandler declined to discuss the use of such agreements.

Now, Danielle Ellis claims various problems with the house, from serious drainage and erosion problems to annoying workmanship issues. The garage floods when it rains, and the propane tank is where the driveway turnaround should be.

Chandler said Washington Homes has assigned three superintendents plus an assistant to handle the 10 homes being built in the former Garrett subdivision. He said the company's usual ratio is one superintendent for every 10 houses.

Chandler did not respond to the specific complaints made by Ellis, but said Washington Homes takes all complaints seriously. He said the company has improved its automated tracking system and sets a timeline to which each project should adhere.

Sonja and Dennis Fortune came upon a house under construction in Aquia Overlook in June 2003. The buyout of Garrett had already taken place, and this was a Washington Homes model.

Sonja Fortune said that they signed a contract for $392,000 and expected to be in by August. Most colors and options had already been selected, and they were satisfied with those choices until they were told that the options raised the price to $418,000.

They refused to pay the $26,000 increase, but did agree to pick up $3,000 for certain extras.

Then the delays began, mostly due to the complicated installation of the septic drainfield, Chandler said. The house sits downhill from the drainfield, so sewage must be pumped along.

Closing didn't happen until the end of October, about three months late.

Improper grading has caused the sloping back yard to erode, leaving a 3-foot-deep ravine, Dennis Fortune pointed out, exposing a buried propane tank, and sending sediment into a tributary of Aquia Creek.

Chandler did not respond to each specific complaint made by the Fortunes, but said the company will address every issue that troubles its customers.

"I'm disappointed that they are disappointed," he said. "It's our intention to live by our responsibilities and obligations for any homeowner warranty service, and that's what we intend to do."

To reach RICHARD AMRHINE: 540/374-5406 ramrhine@freelancestar.com