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For Immediate Release

Media Contact:
Shanetta J. Paskel, 410-576-7939
spaskel@oag.state.md.us

Attorney General Settles With Smart Development/Premiere Homes
Company agrees to pay restitution to consumers for canceled contracts

Baltimore, Md (November 7, 2008) - Maryland Attorney General Douglas F. Gansler today announced that his Consumer Protection Division has reached a settlement with a Rockville-based home builder, Smart Development/Premiere Homes, L.C. (“Premiere Homes”), and the company’s owner, Edward Kevin Smart.

In August 2008, the Division filed charges against Premiere Homes alleging that its building contracts contained illegal clauses that it used to terminate its building contracts with consumers. The Division further alleged that Premiere Homes repeatedly took advantage of this termination clause when favorable market conditions caused housing prices to rise by canceling its contracts to build homes after one year and refusing to build the homes unless consumers signed new contracts agreeing to pay Premiere Homes more money. According to the Division, in one Prince George’s County development called Dower Ridge Estates, Premiere Homes did not inform consumers of regulatory difficulties it was experiencing. When construction was delayed and property values had risen sharply, Premiere cancelled its building contracts in the development and refused to build the homes unless consumers paid more money. A Final Order entered by the Division with the consent of Premiere Homes will pay restitution to consumers whose contracts were cancelled.

“Under Maryland law, a home builder is liable to consumers for damages if it fails to build consumers’ homes,” said Attorney General Gansler. “I am pleased that consumers whose contracts were cancelled will get compensation through this settlement.”

Although Premiere Homes denied it violated any law, under the settlement it has agreed to remove from its contracts the cancellation clause that the Division alleged was illegal. The company also agreed to disclose to purchasers any problems it experiences that may delay construction of their homes. Under the settlement, Premiere Homes will pay the Division restitution totaling $925,000 that the Division will distribute to consumers whose contracts were cancelled by Premiere Homes. The company and its owner also agreed to pay the Division $75,000 for its costs and a penalty.

Consumers eligible for restitution under the settlement will be contacted by the Consumer Protection Division.

   

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