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How to protect yourself when building a new home

Central Indiana seeing “tremendous growth”
Posted at 2:00 AM, May 16, 2019

INDIANAPOLIS— The new home building market is strong right now, with neighborhoods under construction across Central Indiana. But new home construction has been the subject of hundreds of complaints with the Attorney General's Office.

In Marion County, records show that permits for new family homes were up 23% in 2018 compared to 2017.

“We’re seeing tremendous growth all around Indianapolis,” said Jerrod Klein, VP of Sales and Marketing for Davis Homes and a member of the board of directors at BAGI (Builders Association of Greater Indianapolis). “Consumer confidence is strong and interest rates are still very, very good. This is a very strong time right now in Indianapolis.”

In Central Indiana, Hamilton County has the largest market share of new single-family home permits with 35% , Marion County has 22% and Johnson County has 13%.

Call 6 Investigates obtained consumer complaints filed with the Indiana Attorney General’s Office and found hundreds of complaints since 2010 about new home construction. Consumer claims against builders include failure to honor warranty, poor workmanship, unsatisfactory performance, defective product, refusal to cancel a contract, and billing disputes.

To protect against these issues, Klein recommends having a contract with the builder.

"If you have it all in writing, you can always go back to the paperwork,” Klein said. “There should never be oral agreements. It should be in writing to eliminate confusion."

Klein also has the following recommendations:

  • Use a realtor
  • Research builders beforehand. If you choose a builder that’s a BAGI member, the builder has agreed to follow quality standards.
  • Check with your city or county to make sure the home has been issued a certificate of occupancy, which is a document indicating the house or building is safe to live in.
  • Hire an independent inspector and work with the builder to fix any issues before you buy the home.

“If it’s any kind of code circumstance, those should absolutely be addressed before closing,” Klein said.

If the builder does not fix the problems, you can walk away and lose your earnest money.

Call 6 Investigates uncovered some communities do not have a certificate of occupancy.

One Indianapolis couple learned that the hard way while building their new home. Tonight on RTV6 News at 11:00, why the family calls their home building experience a “nightmare” and what they want you to learn from their story.


Retain an attorney before signing any documents

Check for certificate of occupancy

  • Has your local municipality signed-off on your house?
  • The City Inspector's office can help you find records.

Hire your own inspector

  • While the builder will schedule a final “walk-throughs” with you, it is important to invest the money in hiring your own home inspector.
  • Find an inspector that has a good reputation and who will conduct a thorough inspection.
  • Any offer or contract should be contingent upon (or subject to) a whole-house inspection with a satisfactory report. Get a right-to-inspect in your initial purchase agreement.

Building codes

  • Research your area’s building codes and certificate of occupancy requirements (remember, some municipalities do not require an inspection prior to move in).
  • Most new homes must also receive a certificate of occupancy. Request to see your certificate. You can also find the certificate at the city inspector’s office.

Pre-settlement walk-through

  • Consider having your inspector accompany you on twice-monthly walk-through of the home during the construction phase.
  • Be wary of any construction agreement that does not allow you on the premises prior to completion.
  • The walk-through is usually conducted just prior to finalizing your home purchase with the builder. This is a time when you have the opportunity to closely scrutinize the home. You should be observant, carefully examining all surfaces, fixtures, floors and walls for possible damage.
  • During this walk-through, you should write down a checklist of all the items that need repair before you move in.
  • Do not agree to close until all items on the checklist have been corrected unless you are willing to do them yourself. Keep a copy of the checklist for yourself.

Warranties and Repairs

  • Many builders schedule two visits during the first year you occupy your home. One is near the beginning and the other near the end to make necessary adjustments and to perform work of a non-emergency nature.
  • This process is designed to let the newly constructed home settle into its new environment, allowing flaws to appear which can be fixed at one time, such as cracked tiles, grout or nail-pops in the drywall.
  • Most builders will also have warranty service procedures to follow. Request these procedures so that you know how you should interact with the company.
  • Familiarize yourself with your warranty. Builders are not required to fix problems if the warranty has expired; however, some items, such as appliances, may be covered under manufacturers' warranties and relief may be found through the manufacturer.

What to do if a defect occurs

  • Contact the company and follow-up your conversation with a written letter outlining what needs addressed.
  • Include your name, address, home and work telephone numbers.
  • Type your letter if possible.
  • Keep it brief and point out all relevant details.

State exactly what you want done and how soon you expect the problem to be resolved. Be reasonable and pleasant.

  • Include all documents relevant to the problem. Send copies and keep originals.
  • If an impasse occurs, you have some options:
    • Pursue legal proceedings.
    • Contact the local homebuilder’s association.
    • Contact the Better Business Bureau.
    • Contact the Indiana Attorney General’s Office.