Business, Politics

Attorney General’s Home Builder Guaranty Fund pays out over $388,000 to Maryland home buyers

BALTIMORE, MD—Maryland Attorney General Brian E. Frosh announced on Monday that in FY 2019, the Home Builder Guaranty Fund (the Guaranty Fund), administered by the Consumer Protection Division, paid a total of $388,160.39 to claimants as reimbursement for losses resulting from acts or omissions by registered home builders related to new home construction.

In addition, the registrations of five builders were suspended.

The total payout from the Guaranty Fund to Maryland consumers over the past five years exceeds $2 million. This information was included as a part of the comprehensive 2019 Annual Report of the Home Builder Registration Unit submitted to the Governor and General Assembly.

The Maryland Home Builder Registration Act (HBRA) protects new home buyers by requiring builders to register with the Division and by providing an enforcement mechanism that allows the Division to prevent builders with a bad track record from continuing to build in Maryland. The Division’s Home Builder Registration Unit administers and enforces the HBRA. During its 2008 Legislative Session, the General Assembly enacted legislation to provide additional protections for home buyers, establishing the Guaranty Fund and adding a registration requirement for sales representatives for Maryland home builders. The Guaranty Fund protects buyers of new homes who purchase a new home from a registered home builder and suffer an actual loss as the result of:

  • Incomplete construction of a new home;
  • Breach of an express or implied warranty;
  • Failure to meet construction standards or guidelines; or
  • Failure to return a deposit or other payment to which the home buyer is entitled.

The Home Builder Unit also reached settlement agreements with seven builders in FY 2019 in which the home builders and principals have agreed to pay penalties and costs totaling over $40,000 to settle allegations that they violated Maryland’s home building laws, including operating as a home builder without being registered, failing to disclose required information to the Unit in their registration applications, or failing to include required disclosures in their contracts with Maryland consumers.

“The Guaranty Fund allows consumers to receive compensation that they might not otherwise have been able to recover for the losses they suffered at the hands of home builders that violate Maryland law,” said Attorney General Frosh. “Before paying any money to a home builder, consumers should take steps to protect their investment by making sure that their homes are built by registered home builders and that any deposits are protected by escrow accounts, bonds, or letters of credit.”

Consumers who have had problems with their new homes should contact the Division’s Mediation Unit at 410-528-8662 in Baltimore or call toll free at 877-259-4525.

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