Attorney General Settles With Smart Development/Premiere
Company agrees to pay restitution to consumers for canceled contracts
Md (November 7, 2008) - Maryland Attorney General
Douglas F. Gansler today announced that his
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.