BRADENTON, Fla. -- A federal lawsuit filed by a former KB Home human resources director indicates the home-builder knew condos at the troubled Willowbrook Townhomes had structural defects - and employees were ordered not to disclose them to home-buyers.
10 News has been covering the problems Willowbrook residents have been having with their crumbling condos. The KB Home construction was done anywhere from two to five years ago.
But the whistleblower lawsuit, Ruben O'Neill v. KB Home, alleged the homebuilder knew about - but failed to disclose - structural defects in their Willowbrook homes before selling them to home-buyers in June 2007. O'Neill claims he was fired after he objected to the company's "keep quiet" policy on the defects.
"The type of defect that was alleged would result in mass loss of property if not mass loss of life," said Natasha Dalton, the attorney who represented the whistleblower.
The suit alleged "KB Home had knowledge of substantial and potentially life-threatening structural defects which affected approximately 50-60 three-story townhomes." And "the Division President again told the Construction Manager not to disclose the defect" to homeowners prior to closing.
The lawsuit was quickly settled in 2008 with a confidentiality stipulation.
A second federal whistleblower lawsuit was filed in 2009 by the construction manager, who says he was demoted because he raised the same concern back in June 2007. Matthew Brown v. KB Home backed up some of the allegations made in O'Neill's suit.
Brown's suit was also settled rather quickly and also included a confidentiality agreement.
State law (FSS 475.278) requires all home-sellers to disclose "all known facts that materially affect the value of residential real property."
KB Home's Regional President, George Glance, who was accused in O'Neill's lawsuit of giving the orders in June 2007 to withhold the information from home-buyers, told 10 News Thursday that a construction mistake was identified and homeowners were notified in August 2007.
"We stopped construction, we made the corrections," Glance said. "(Repairs to column construction) were all done under the supervision of the structural engineer."
A KB Home spokesperson added "all closings were immediately put on hold, homeowners received notification and corrections were immediately made under an engineer's advice, and to the homeowners satisfaction."
But the letter to homeowners provided to 10 News was dated August 2007, several weeks - or months - after dozens of homeowners closed on their new homes. According to the federal lawsuit, KB employees wanted to let prospective home buyers know about the problems as soon as June 2007.
"I never would have closed if I had known," one Willowbrook homeowner told 10 News Thursday after learning of the news.
KB Home has promised to fix roof and balconies of condo owners who are having problems, but many say the damage has gone way past repair. They add that the construction's damaged reputation has essentially rendered their property worthless.
10 News asked Glance if KB Home would compensate the homeowners for their lost investment.
"We're very enthusiastic about the progress we've made with the homeowner's association," Glance said without directly answering the question. "We're going to begin repairs as soon as we've got the proper permitting in place."
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