Judge calls DR Horton “greedy corporate giant” in HOA lawsuit

By Deborah Goonan, Independent American Communities


Yesterday I shared the news of Millennium Tower, a luxury condo tower in San Francisco that is rapidly sinking into the ground, and the subject of several lawsuits. Units in Millennium Tower sold for at least a half million dollars, with penthouse units selling in the millions, but now they are essentially worthless.

Today I feature Majorca Isles Master Association in Florida – a planned townhouse community developed by D.R. Horton, intended to provide affordable homes for low and moderate income residents.

Construction began in 2005,  prior to the real estate crash, with plans to build more than 600 homes. However, the mega-developer promptly ended all activity as soon as the market tanked. At that point, according to court records and the opinion of A. Jay Crisol, D.R. Horton stopped funding the operating deficit of the association and denied owners of 355 homes access to amenities such as security and cable TV, in direct breach of fiduciary duties.

As a result, the condo association had to declare bankruptcy. The Trustee then sued D.R. Horton.


Judge says “greedy corporate giant” must pay $16.3 million to Miami Gardens condo


In a scathing opinion, a federal judge in Miami blasted the conduct of homebuilder D.R. Horton, calling it a “greedy corporate giant” and awarding damages of $16.3 million to the trustee of a bankrupt homeowner’s association in Miami Gardens that had sued the Texas-based behemoth.

The court ruled that D.R. Horton, America’s largest homebuilder, engaged in deceptive and unfair trade practices and breached its fiduciary duties.

Read more here: http://www.miamiherald.com/news/business/real-estate-news/article110606817.html#storylink=cpy


You can read more details on the history of Majorca Isles here:
National homebuilder loses $16M judgment to condo association
Oct 27, 2016, 12:02pm EDT Updated Oct 27, 2016



And the third article I share with readers today makes it crystal clear why it is a huge mistake to put developers in control of communities. Doing so provides easy opportunity for the home builder to evade legal obligations, hide the truth from homeowners, shift economic loss to consumers, and divert funds to the development corporation at the expense of the homeowners, condominium, or cooperative association.



D.R. Horton was found guilty last week of ‘deceptive practices’ regarding the Majorca Isles Master Association in Florida. U.S. Bankruptcy Judge A. Jay Cristol ruled that the national home builder violated Florida’s Deceptive and Unfair Trade Practices Act and owes punitive damages of $16.3 million.

The case is in regards to a community in Miami Gardens that D.R. Horton started developing in 2005. The builder sold just more than half the units before it stopped developing the property when the recession hit. The problem revolves around the four employees D.R. Horton placed as directors of the Majorca Isles Master Association until the project was complete.

According to Cristol’s ruling, the four D.R. Horton employees in charge of the master association decided to divert funds due to it and pay the expenses of the five condominium associations. This was a breach of fiduciary duty to the master association, the judge ruled.

“When it appeared that the deficit funding obligation to D.R. Horton was reaching $50,000 per month, D.R. Horton, through its employees, decided to shift the economic loss of D.R. Horton to the home owners by cutting services and amenities, which the home owners were entitled to receive, and stopping the deficit funding that D.R. Horton was obligated to supply,” Cristol ruled. “The actions by D.R. Horton can only be classified somewhere between not nice and evil.”


The case is another example of the failure of privatization as an effective means of providing affordable housing for low and moderate income homebuyers.

When the country’s largest developer callously walks away from housing construction and financial obligations, then fights in court for the next 4 years in an attempt to avoid responsibility, it sends a strong message that the private real estate home building industry simply doesn’t care about serving the needs of people.

It should be obvious that when the potential for return on investment dries up, so do the funds promised by private, for-profit developers. And while that’s just a business decision for a giant corporation such as D.R. Horton, the consequences are devastating for homeowners who were lured into the attainment of the American Dream, only to have it yanked out from under them at the first opportunity.

What will happen next for Majorca Isles? D.R. Horton may decide to appeal the decision, dragging out the case several more years, and withholding payment of that $16.3 million award.

1 thought on “Judge calls DR Horton “greedy corporate giant” in HOA lawsuit

  1. I think D.R. Horton should pay the award now and if the decision is overturned on appeal, the money would be returned.

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