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Brady Sullivan to buy back homes in deal with consumer protection officials

February 04. 2014 8:55PM

LACONIA — Brady Sullivan Properties will make offers to buy back five poorly installed modular homes in its Paugus Woods subdivision, under terms of an agreement reached with state consumer protection officials.

New Hampshire Attorney General Joseph Foster announced the settlement involving the Villas at Paugus Bay, a subdivision on White Oaks Road in Laconia. However, questions linger about how the properties passed city inspections, and then months later started showing cracks in walls and failing independent inspections.

"As I recall, there were some issues with code inspection," said Laconia Mayor Edward Engler, who prefaced his remarks by saying he's only been mayor for two weeks. "The person who did these inspections is long gone."

Brady Sullivan had already repaired defects in about 40 modular homes in fall 2011, when the Attorney General brought action against the company. The Consumer Protection Bureau alleged Brady Sullivan violated the Land Sales Full Disclosure Act because promotional materials claimed the homes complied with local and state building codes.

In a statement issued yesterday, Brady Sullivan denied any wrongdoing and said it believes it would have been vindicated at trial.

"Brady Sullivan has always been committed to building and selling safe, quality and affordable homes in the Villas at Paugus Bay and has continually stood behind its warranties to the homeowners in the Villas at Paugus Bay," the statement reads.

According to the Attorney General, homes at Paugus Woods did not meet codes covering electrical work, heating and ventilation. They were not properly attached to their foundations. The insulation was inadequate; foundation support was not up to snuff; and some modules were not properly bolted together.

"A home is the most significant purchase many of us will make in our lifetimes," Foster said in a statement issued Tuesday afternoon. "Because of the importance of such a purchase, New Hampshire law requires that homes in subdivisions of this kind be accurately described in promotional materials and not contain the type of substantial defects that were discovered in these homes. "

The settlement was approved last week by a Belknap County Superior Court judge.

Both Brady Sullivan and Assistant Attorney General David Rienzo said the city had inspected the homes and approved them for occupancy.

The Attorney General became involved after state Fire Marshal inspectors found that some modules had not been properly bolted together, Rienzo said. Brady Sullivan eventually paid for an engineer to inspect each home and do repairs.

"Brady Sullivan then expeditiously repaired all of the problems identified for all homeowners who wanted Brady Sullivan to do so," the company said in a press statement.

Rienzo said the buy backs were the issue that prompted the Attorney General to bring suit. Under the terms announced today, Brady Sullivan will offer to buy back the house at its original price. The offer will be good for 30 days, and the owner will have three months to move out.

He said penalties were possible under the law, but the settlement calls for Brady Sullivan to pay $85,000, which represents administrative assessments and investigative costs. Rienzo said his office has no other investigations involving Brady Sullivan.

"Brady Sullivan has chosen to put the matter to rest on terms acceptable to it and the Attorney General and in doing so, will move forward with its continued mission of providing quality homes at affordable prices throughout New England," said Brady Sullivan in its statement.

Engler, who is the editor of the Laconia Daily Sun, said the city experienced significant turnover in its code enforcement office in the years Paugus Woods was built. Code inspections were eventually put under the control of the Planning Department, and code inspections have been privatized.

His newspaper wrote about problems with the code inspection office.

"That was one of the issues, how did these (Paugus Woods) buildings pass inspection? Not a lot was said about it," Engler said. He said the feeling at city hall is that the city inspection process has improved.

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