HOA wins $13.5M in arbitration against DR Horton (CO)

By Deborah Goonan, Independent American Communities

Updated May 15, 2017 5:33 PM EDT

This is a construction and design defect case that boggles the mind.

A D.R. Horton subsidiary homebuilder in Colorado constructed a 1200 home subdivision roughly one decade ago. Apparently, the homes were built on land with a high water table, so home designs included sump pumps and a drainage system designed to carry ground water away from basement foundations. According to the news release below, excess groundwater from the sump pits was supposed to be carried out to the streets, where it would then follow stormwater flow paths out of the community.

But when the underdrain system was constructed, drain clean outs were covered over by asphalt roads, hidden from view. The HOA, of course, had no idea that the clean outs existed, and that it was their responsibility to regularly maintain them to prevent clogs and malfunction of the system. In 2014, the HOA discovered the problem when a homeowner reported voluminous amounts of water flowing into her basement from her sump pit.

How in the world did this plan ever get approved by the local building code inspector? Who, if anyone, was responsible for signing off on construction and issuing certificates of occupancy?

What was the homebuilder thinking? How were the homeowners supposed to know there should be vertical clean out points on a drainage system they did not even know about?

Of course, the HOA had to retain attorneys when D.R. Horton failed to take responsibility for the problem. The case recently went to Arbitration, where the HOA was awarded more than $13.5 million to redesign and rebuild the system.



Benson, Kerrane, Storz & Nelson receives $13,572,000 Arbitration Award Against National Homebuilder D.R. Horton for Faulty Underdrain

AURORA, Colo., April 26, 2017 /PRNewswire-USNewswire/ — A single-family home HOA has received a final arbitration award of $13,572,000 against a subsidiary of Texas-based homebuilder D.R. Horton related to improper design and construction of the community’s underdrain system. The HOA’s attorneys, Benson, Kerrane, Storz & Nelson (“BKSN”), of Golden, Colorado, believe this it to be one of the largest residential construction defect arbitration awards in the state’s history.

In 2014, a homeowner reported to the HOA that hundreds of gallons of water were coming up through her sump pit and flooding her basement. While investigating the damage, the HOA learned for the first time that the homes in the ten-year-old community were connected to an underground drainage system. This underdrain system was intended to collect groundwater from the foundations of the homes and carry the water under the streets and out of the community, but was failing due to improper design, construction and lack of maintenance.

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Another report in the Denver Business Journal identifies the Plaintiff as The Conservatory HOA in Aurora.

Aurora HOA wins $13.5 million award in dispute with Texas homebuilder

Apr 11, 2017, 1:36pm MDT

Molly Armbrister
Denver Business Journal

A homeowners association in Aurora has received an arbitration award of $13.5 million in a dispute with D.R. Horton Inc., according to a statement from the HOA’s attorneys, Benson, Kerrane, Storz & Nelson PC.

The HOA for The Conservatory neighborhood, roughly located along Hampden Avenue west of E-470, received the award against KDB Homes, a subsidiary of the Texas-based D.R. Horton, in a dispute over water damage related to the community’s underdrain system, the release states.

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3 thoughts on “HOA wins $13.5M in arbitration against DR Horton (CO)

  1. Thank you. The article has been updated with a link to the news relase by Molly Arbrister of Denver Business Journal.

  2. The Denver Business Journal identifies the Aurora community is the HOA Conservancy and the award is against KDB Homes, a subsidiary of D R Horton. Reporter Molly Arbrister 303 803 9232

  3. Donna Simpson May 15, 2017 — 4:31 pm

    I know where this subdivision is; but DR Horton is not the only developer to put in poor drainage systems in after all out of sight, right? That is until those systems stop working due to poor installing and of course proper materials and not following the contour of land to allow for easy flow. My advice to these homeowners go down the Assessor’s office request for a reduction on your property assessment for cost to cure. It may not be much, but every little bit helps. “Arapahoe County Assessor’s Office”, you are allowed to do this, see how long you are able to retain this reduction, if not file an appeal with the County Board of Appeals (May) of every year, if you are stilled denied you can take it all the way to the county commissioners or the State. I should know I worked for Arapahoe County.

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