Tuesday, June 02, 2015

DC AG Tags 'Fix & Flip' Couple With Lawsuit Accusing Pair Of Performing Illegal, Shoddy Renovations On Recently-Bought Houses, Using Unlicensed Contractors, Failing To Pull Proper Permits Or Comply w/ Inspection Requirements, Damaging Neighboring Properties; Crappy End Product Ultimately Unloaded Onto Unwitting Homebuyers, Leaving Them Holding The Bag

In Washington, D.C., WAMU Radio 88.5 (American University Radio) reports (via Public Citizen's Consumer Law & Policy Blog):
  • D.C. Attorney General Karl Racine [] filed a complaint against Insun Hofgard, a Virginia developer who has renovated and sold dozens of properties in D.C. in recent years, accusing her of illegal and shoddy work on those homes.

    In the complaint, Racine says Hofgard and her husband renovated and sold 15 homes since 2013 that had not been properly permitted or inspected. Work was conducted without permits and by unlicensed contractors, he says, and the Hofgards ignored repeated attempts by D.C. regulators that they stop.

    "They represent that the properties are safe and sound and have been fully renovated and they mark up the price. People are left holding the bag, oftentimes having to go back and fix things that were represented to be fixed and otherwise live in a state not knowing if a new patio is going to hold. These are serious offenses," said Racine in an interview with WAMU.

    In the complaint, Racine asks a judge to stop the Hofgards from selling any of the 22 properties they currently own and are renovating unless they are properly permitted and inspected. He also asks that they pay restitution to buyers who found problems in their homes, and that the Hofgards pay $1,000 per offense of the city's Consumer Protection Act.

    Hofgard was one of the developers featured in WAMU's three-part series on house-flipping in D.C. and the risks that badly flipped homes can pose to residents. According to the WAMU investigation, Hofgard bought, renovated and sold over a dozen properties in recent years, and has since faced a pair of lawsuits from her buyers and tens of thousands of dollars in fines from city regulators.

    The attorney general's office launched an investigation late last year, shortly after Hofgard signed an agreement with the D.C. Department of Consumer and Regulatory Affairs not to sell any more properties that had code violations. According to WAMU's reporting and the attorney general's investigation, she sold a property that had not been legally constructed or inspected the same day she signed the agreement.

    In written responses to questions posed by WAMU for its series, Hofgard blamed her contractors for the majority of the problems, and says that she had offered to fix the majority of the problems that buyers had pointed out.

    But the attorney general's suit identifies a host of other violations, from failures to get proper permits to incomplete inspections, all of which are required before a renovation can be completed. In one case, certificates of occupancy for two condo units were not obtained before their sales, meaning that their owners are occupying them illegally.

    The complaint also accused the Hofgards of continuing work on properties despite DCRA having stopped it, and of damaging adjacent properties during construction.

    "[The Hofgards] flaunt the law and disregard their promises to DCRA, continuing with their construction spree despite Stop Work Orders, Notices of Infraction, and settlement agreements issued or obtained by DCRA, " it claims. "[They] do not even respect neighboring property lines, as they trespass and damage the homes of neighboring D.C. residents."

    Racine told WAMU that the complaint is an important tool to help protect other homebuyers, especially as the buying season picks up.

    "Spring brings the homebuyers out, and obviously the market in D.C. is very important," said Racine.

    "This case should be a message to people who are in business, sell houses, that every representation they make should be true. It should also be a message to renovators and contractors and the like that they need to do their job in a professional and honest way, and if they're not doing so the office of the attorney general will investigate them," he said.

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