Home builder settles with Gansler

John O'Brien Nov. 7, 2008, 2:14pm


BALTIMORE (Legal Newsline) - A home-building company will pay $925,000 in restitution to consumers who had their contracts canceled as a result of a settlement engineered by Maryland Attorney General Doug Gansler.

Gansler announced the settlement with Smart Development/Premiere Homes Friday. He had filed suit against it in August, claiming that the company's contracts contained termination clauses that were illegal.

"Under Maryland law, a home builder is liable to consumers for damages if it fails to build consumers' homes," Gansler said. "I am pleased that consumers whose contracts were cancelled will get compensation through this settlement."

The company denied any wrongdoing and agreed to remove the disputed termination clause and pay $75,000 to Gansler's Consumer Protection Division, which will contact consumers eligible for restitution.

The clause terminated contracts whenever market conditions caused housing prices to rise, Gansler said. The company would refuse to finish work unless the consumer agreed to a new, more expensive contract, he added.

From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.

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