Consuming Interests: Rockville home builder charged with Consumer Protection violations - News and tips for consumers on shopping, saving money, deals and credit

Rockville-based home builder Smart Development/Premiere Homes L.C. and its owner, Edward Kevin Smart, were charged today with violations of the Consumer Protection Act, acccording to the Office of the Attorney General.

The charges allege that Premiere Homes' building contracts contain illegal clauses that the builder used to terminate building contracts with consumers without any liability if it failed to build a client's home.

The charges also allege that Premiere Homes repeatedly took advantage of this temrination clause when favorable market conditions caused housing prices prices to rise. The AG's Office says the company would cancel its contracts to build homes after one year and refused to build the homes unless consumers signed new contracts agreeing to pay Premiere Homes more money.

"Under Maryland law, a home builder that fails to build homes cannot cancel its contracts with consumers without liability," said Attorney General Doug Gansler. "Consumers should be able to receive their promised homes."

Furthermore, the AG's Office says Premiere Homes failed to timely address regulatory difficulties in one of the developments it was building in Prince George's County. As a result, construction was delayed for years and yet, the AG's Office says that Premiere Homes continued to sell home to consumers without informing them of the regulatory issues. The charges allege that Premiere would then cancel the consumer contracts when it was unable to build the home in one year and when property values had risen sharply.

OAG is seeking damages and restitution for consumers harmed by the company's practices and payment of penalities and costs to the state. A hearing on the statement of charges is schedule for Jan. 12, 2009.

Consumers who may have had problems with Premiere Homes should contact the Consumer Protection Division at (410) 576-6374.