Kevin and Penny McAnally, a pair of Oklahomans, were looking to retire to the Gulf Coast in 2018 and were considering their options. They had a budget for a new house, but were leaning toward a fixer-upper on a private lot. Then they saw the zero-entry pool and lazy river at Cypress Village in Orange Beach.
“When we saw that pool we were hooked,” Penny said. “I decided I didn’t have it in me to renovate a house while we were living in it.”
So instead, the McAnallys returned to Oklahoma and began negotiations with one of the subdivision’s developers, DR Horton, to build a new home in Cypress Village, which is immediately east of The Wharf on Canal Road. DR Horton, billed as “America’s Largest Homebuilder,” was constructing a new model floor plan in the community — a two-story coastal cottage known as The Monroe — and the McAnallys said the builder was eager to complete the sale.
“We were living in Oklahoma, so they were going to send pictures of construction updates, but they never sent anything,” Penny said. “Instead, we would get a message like, ‘your house is on Step 8 of 9,’ so when we were told it was ready, we sold our house up there and moved down. Then when we got here, they said they needed two more weeks to finish it.”
After paying out of pocket for two weeks in a hotel, the couple moved into their new home. The first red flag was that their air conditioner didn’t work. Or so they thought. After several visits from a perplexed HVAC technician, the McAnallys learned the problem was, in fact, that their attic was never insulated. Within weeks, they had identified dozens of smaller checklist items that were incomplete or unsatisfactory, but major complaints included a balcony railing affixed with a single nail, slippery carpet installed on an uneven staircase and within months, the tile shower and bathtub combo in one bathroom allegedly “disintegrated.”
They later found out there was no waterproof backing installed behind the tile. During heavy rains or blustery winds, the McAnallys documented water and air intrusion through exterior doors and windows. Many of the larger problems were eventually repaired, but when Category 3 Hurricane Sally targeted the Alabama Gulf Coast in 2020, the McAnallys had reason to be concerned.
“I thought it was going to fall apart … Everything was shaking,” Penny said.
The house withstood the storm with relatively minor damage, but Penny said she has no confidence it could withstand another, or a more serious storm.
“It has been horrible. We thought we’d retire early, get down here and my health would be better, but we’ve been dealing with this,” she told Lagniappe in December.
The McAnallys contacted an attorney and family friend, David Sheller of the Houston-based Sheller Law Firm, who paid a visit and noted their home featured standard windows rather than impact-rated windows. The McAnallys purchased the home with the representation that it met the Insurance Institute for Business & Home Safety (IBHS) FORTIFIED Gold Standard, a structural reinforcement program that incorporates more stringent and expensive building requirements, but, according to promoters, provides a discount on homeowners insurance upon certification.
Acting on a hunch, Sheller later teamed up with local attorneys Thomas Pilcher and Steven Hazelwood from Wilkins, Bankester, Biles & Wynne P.A. in Fairhope and within months, they inspected more than 120 DR Horton homes in 19 subdivisions in Baldwin and Mobile counties.
“We performed window testing and discovered they were not adequate for efficiency or impacts in any of the homes we’ve seen,” Sheller said.
The team also inspected attics and found inadequate gable end bracing and fasteners, while they also brought in ground-penetrating radar and determined foundations had “multiple issues” including inconsistent slab thickness, unprepped sites and misplaced mesh or welded wire fabric. Allegedly, limited destructive testing found additional deficiencies in roof bracings and strapping, as well as fasteners for vinyl siding.
In November, the attorneys filed a complaint on behalf of 88 plaintiffs at 61 addresses against DR Horton and Bethel Engineering, a firm that allegedly certified the IBHS FORTIFIED Gold Standard. On Jan. 3, Judge Jody Bishop denied the plaintiffs’ motion for an injunction against DR Horton, but also denied the defendants’ motions to dismiss the complaint.
Pilcher said the claims are based on violations of Alabama law protecting against deceptive trade practices, but they also include counts of fraud, negligence, wantonness and nuisance.
“The distinguishing factor is that these homes were advertised as ‘Gold FORTIFIED’ and the fact that they’re not makes it fraud,” Pilcher said, adding IBHS has touted Mobile and Baldwin counties for high concentrations of FORTIFIED Gold homes, some 4,500 since 2015. “It’s a huge deal because if you purchased a DR Horton house that’s Gold FORTIFIED and you qualify for an insurance reduction, the insurers could come back and say now you don’t qualify. I’m going to be conservative and say that could lead to an automatic 30 percent increase in insurance premiums on all of these houses.”
Sheller suggested DR Horton’s subsidiary mortgage, title and development companies are uniquely positioned to help build and sell new homes cheaply and quickly, and he alleged it allowed the builder an opportunity to take advantage of prospective homeowners during a historically hot housing market.
“What they will do is tell people who don’t want to close they’ll be charged more for delays or their house will be sold to someone else,” he said. “In some cases, they will close before there is a certificate of occupancy and then DR Horton either refuses to repair problems or make poor attempts at repairs.”
Hazelwood chimed in: “It’s their mortgage and title company, their real estate company, their general contractors; the normal checks and balances of it are missing.”
DR Horton did not respond to requests for comment, but Lagniappe also sought the perspective of Jake Traweek, the building inspector for the town of Loxley. There, Traweek said DR Horton applied for at least two dozen building permits in the past month.
His office is concerned with municipal building codes and infrastructure, not the FORTIFIED Gold program, but “we inspect each house,” he said. At least 12 of the addresses in Sheller’s complaint are in Loxley.
Traweek admitted Loxley has had “growing pains” since DR Horton and others have begun developing the so-called “Golden Triangle” between Interstate 10, State Highway 59 and U.S. Route 31, but added the builder is also an important source of municipal revenue. The town borrowed money to run a 12-inch water line to the Stonebridge community a few years ago, an area where initial plans called for some 10,000 homes to be built eventually. Loxley gets $2,100 for each water tap, plus permit fees.
“People bellyache about [DR Horton homes] all the time, but they ain’t gonna fall down,” Traweek said. “They are the number one builder in the world, but most people don’t understand it’s just a spec home. Are you looking for a custom home for a spec price? That’s not going to happen. If you want a custom home you pay for a custom home. To me, DR Horton bends over backward to make you happy. They want to sell you a house.”
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