KB Home settles FL building defects claim for $23.5M

Dive Brief:

KB Home — the sixth-largest homebuilder in the U.S. — has reached a $23.5 million settlement deal with the Florida attorney general’s office over allegations of substandard construction and deceptive business practices, according to The Los Angeles Times.
Florida Attorney General Pam Bondi alleged that KB failed to disclose the building violations in the homes the company was selling and did not let buyers know that the homes did not meet the original plans and specifications. Bondi asserted that the company did not honor valid requests for repairs under warranty but has now spent more than $71 million to fix water intrusion issues, caused by defects, in approximately 1,700 homes.
In the settlement agreement, KB must fix homes that are less than 10 years old and that have certain defects, as well as pay the attorney general’s office $6.5 million for restitution to homeowners and to cover the costs of the state’s investigation.

Dive Insight:

In a statement, KB said that it had cooperated with the attorney general's office "to address issues with residential stucco performance, which we consider to be an industry-wide challenge in Florida."

KB has not admitted any wrongdoing, according to The Times, and denies violating Florida law, but it will spend approximately $17 million over the next five years — also part of the settlement agreement — to "improve its construction techniques, train its subcontractors and use improved materials in its new construction."

In another state issue, KB and two other developers in California filed suit against the Fremont Unified School District in October for not assigning their new 500-unit housing development to its schools. KB said this was in retaliation for KB refusing to pay more toward new schools than the state requires. The FUSD said there was not room in its schools for additional students and that, already, 2,000 children are forced to attend schools outside the district.

KB’s motion was dismissed this month on the grounds that KB and the other developers had not "met their burden to show the injunctive relief sought should be granted," the San Jose Mercury News reported. The judge said that for the court to order the FUSD to assign 500 homes to a specific school attendance area, the developers must prove that not doing so would harm them and the community, which the judge did not find.