April 6, 1993
Mr. James M. Sysko
Agent Supervisor
Office of Attorney General
Bureau of Consumer Protection
Commonwealth of Pennsylvania
Scranton Regional Office
214 Samters Building
101 Penn Avenue
Scranton PA 18503-2025
RE: George Morris
Your File No. E93-0652
Dear Mr. Sysko:
Reference is made to your letter of March 12, 1993, relative to a
complaint registered by the above cited individual.
Mr. Morris' first statement, that he could not use a builder of his
choice is not true. C.B.G. Limited's Sales Department personnel will
not recommend a builder to any prospective purchaser unless the builder
has achieved "Preferred Builder Status". In order to achieve a
"Preferred Builder Status", the builder must first complete an
application, listing among other things, his bank of account, at least
three trade references and a minimum of three homes that he has
constructed in the past that are at least one year old. C.B.G. receives
permission from the builder to verify his financial status and banking
experiences, his-pu@cliases and payment record with suppliers and
customer satisfaction with construction performed. Assuming the builder
satisfactorily passes this examination, he is required to enter into an
agreement with C.B.G. that calls for strict compliance with our Building
and Safety Codes, Rules and Regulations and Covenants and Restrictions,
all of which are recorded , run with the land, are included on every lot
purchase agreement and the recorded deeds to the property.
All of these procedures are community and property owner beneficial, and
protective in nature. For example, builders agree to comply with the
BOCA Code (11th edition), National Electric Code, National Plumbing Code
and all local codes and ordinances. Builders must include a Ten Year
Home Owner's or Home Buyer's Warranty Insurance Plan, (adopted after the
Morris' purchased) utilize only plans prepared by a registered Pennsylvania
Architect and provide the following certifications for home buyer's protection:
April 6. 1993
Mr. James M. Sysko
Page 2
1. Certificate of Architect attesting to proper and safe
construction.
2. Certificate of Accredited Fire Underwriter attesting to proper
installation of service, vliriyig and all final connections.
3. Certificate of Compliance from plumbing, heating and air
conditioning contractors.
4. Certificate of Compliance from alarm system installer.
5. Certificate of Occupancy from C.B..G's Architectural Control
Committee, which is chaired by a registered architect
(independent of C.B.G.)
6. Agree to four stages of inspection, i.e. at stakeout of home
prior to breakground; after excavation and construction of
foundation (before backfilling); when under roof, at roughin
and when completed.
Mr. Morris, a former Ozone Park, New York resident, purchased a resale
lot from the prior owners, (Arizona residents) utilizing the services of
a Hazleton Real Estate broker. It was a fact in this particular case
that the Hazleton broker personally recommended the builder selected by
Mr. Morris, who happened to be a Preferred Builder in the Valley of Lakes.
In answer to Mr Morris' claims that he could not use a builder of choice,
I will cite three cases disproving his statement. In the first case, a
property owner requested the right to use a contractor that C.B.G. would
not grant preferred builder status, being of unfavorable background
information.
When the property owner insisted, C.B.G. agreed providing we were
relieved of any responsibility for the builder's performance. The
builder promptly went bankrupt leaving substantial unpaid bills and an
incomplete construction.
In the second case, a longtime property owner who lived in the Valley,
had a son whom he claimed had limited capital and wished to serve as his
own general contractor, utilizing the services of known and qualified
sub-contractors and performing some of the work himself. They assumed
full responsibility, agreed to comply with all requirements, made
revisions requested and have performed well to date.
April 6, 1993
Mr. James M. Sysko
Page 3
In the case of a third property owner who utilized sub-contractors and
had a relative serve as supervisor, more than $45,000 in damage was
incurred when improperly installed and un-insulated plumbing froze up
during severe weather, burst and flooded the still incomolete
construction. C.B.G.'s use of Preferred Builders prevents such catastrophes.
Mr. Morris' statement that C.B.G. added "an additional 8%" to the cost
of his home is also untrue. Preferred Builders have the "option" of
entering into a marketing agreement with C.B.G.'s Real Estate Sales
Department. C.B.G. then advertises the builder and his products,
promotes the property on radio and television, through direct mail and
magazine advertising, enters trade shows and conventions and produces
prospects for sales. Requests for home designs and prices are
distributed to our builders for quotes and C.B.G. consummates the
contract. In addition, C.B.G. assists in mortgage applications
preparation, change orders, communication back and forth between
builders, purchasers, lenders, credit agencies, Architectural Control
Committee and a host of other services. Out of the 8% commission
charged the builder, C.B.G. pays commissions to on-site sales and sales
management personnel, outside broker agencies who become involved, sales
administrative personnel, all advertising and promotional costs and a
contribution to road maintenance and repairs. Since much heavy
equipment is involved with home construction, constant upkeep is
required. Without C.B.G's voluntary subsidy, Community Road
Maintenance Fees charged all property owners would require dramatic
increases. Unless a builder pays for and handles his own marketing, a
commission agent is employed. This becomes a part of the cost of the
home.
Mr. Morris' statement that he received "nothing" and had no assistance
from C.B.G.'s housing department is also untrue. No less than four (4)
Housing Department sales and sales management personnel and a variety of
office personnel attended to the needs of Mr. Morris during the entire
length of his construction, as well as before and after completion.
(Please the attachments submitted in proof) Approximately 18
months of service.
Mr. Morris' statement that they went out on their own to pick out
appliances and cabinets is probably true. If customers do not wish to
make their selections from catalogues, and/or existing models, we refer
them to local stores and/or supply houses who display their wares. C.B.G.
does not provide limousine service to and from department stores and/or
suppliers. Nor do we provide an escort. We know of no other developer
who does.
April 6, 1993
Mr. James M. Sysko
Page 4
This detailed explanation should satisfactorily answer Mr. Morris'
final question, i.e. "What was the 8% commission for"? This explanation
should also make him aware of the reasons why property values in the
Valley of Lakes have appreciated far more dramatically then those in the
surrounding area.
An objective person, reading this narrative and the support material,
could ask the following questions:
1. If an objection occurred at the time of contract, why did the
Morris' enter into the agreement?
2. Why did the Morris' not select another builder as their friends had
done?
3. Finally, why wait three (3) years to register an objection or even
ask the question?
I trust my letter is completely responsive to your request. Thank you
for allowing me the opportunity of providing our side of the story.
Sincerely,
/s/
Frank M. Cedrone
Managing General Partner
FMC/va
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