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Toll Brothers claims to be America’s largest luxury home builder, offering “superior design options” and “the highest quality construction.” Many homeowners tell a different story – one filled with construction defects and costly remediation bills.
“Housing inspectors believe shoddy stucco construction is threatening thousands of homes in Pennsylvania, New Jersey and New York – some built by Toll Brothers.”
— Perry Liss, Esq.
Toll Brothers is one of America’s biggest home builders, developing luxury properties and amenity-rich communities across the country. Based in Horsham, Pennsylvania, the residential development giant has studded Chester, Bucks and Montgomery Counties with numerous multi-home communities, where residences average around $600,000.
A History Of Lawsuits & Frustrated Homeowners
Toll Brothers developments often come replete with numerous amenities, from pools and tennis courts to fitness and community centers. The company prides itself on “superior design options” and “the highest quality construction.” Some homeowners, however, say that there’s a different side to Toll Brothers, one that should send prospective purchasers running. In fact, troubling litigation seems to follow the company wherever it builds.
This is especially true in Pennsylvania, where Toll Brothers was founded. Most recently, the home builder has come under attack from a series of lawsuits alleging serious construction defects in stucco-clad homes. Dozens of homeowners have come forward, claiming that faulty stucco installation has left their homes vulnerable to water damage and dangerous mold growth. Many families have been forced to pay thousands, if not hundreds of thousands, of dollars in remediation expenses.
Meanwhile, the company’s business has only grown. On February 22, Toll Brothers reported stronger-than-expected earnings and revenue for the first quarter of 2017, according to CNBC.
Crisis Of Stucco Failure Rocks Industry
Stucco failure has been called an “epidemic” in Pennsylvania, and with recent allegations, Toll Brothers has found itself at the center of the problem. After ABC6 Action News caught wind of the issue, the station’s reporters spoke with nearly two dozens families who live in homes built by Toll Brothers. The homeowners described widespread water damage, untold grief and astronomical repair bills. “You should never, ever have to be in a position where you have to take down the entire outside of your house down to the studs and have it redone,” one Toll Brothers resident said. At the time, however, the company had yet to “step up” and fix the problem. In fact, many homeowners accused Toll Brothers of “dragging its feet,” even in cases when the developer had been notified of faulty stucco years ago.
Toll Trades Silence For Full Repairs, ABC6 Reports
The Castillo family discovered stucco problems at their Glen Mills home in 2013 and quickly notified Toll Brothers of the need for repairs. Two years later, the homeowners’ hopes were still being delayed. “We’ll see if we can get you on the schedule for spring and next summer,” Toll Brothers told the family, according to reports from ABC6.
The Castillos had little recourse. Like most families who buy through Toll Brothers, they had signed away their right to file a lawsuit. As required by Toll Brothers’ warranty, all disputes with the developer are to be resolved through arbitration. The requirement for alternative dispute resolution is widespread in the home building industry. 9 out of the 10 largest residential developers in America require their customers to sign mandatory arbitration agreements, which prevent them from filing civil lawsuits. It’s not hard to see why. As former arbitrator Vicky Pinchon told ABC6, “[developers] like arbitration because it favors them.”
At Last Moment, Homeowners Change Story
Hoping to make use of their only option, the Castillos filed for arbitration. But soon after speaking with ABC6, the family contacted reporters in an apparent about-face: “we are pleased to report that we have worked with Toll Brothers to resolve our claims.”
In fact, nearly every homeowner with whom ABC6 had spoken contacted reporter Nydia Han “just prior to the broadcast of [the station’s] first stucco-related piece.” Han’s inbox was flooded with emails that were “all essentially the same, almost word for word.” Invariably, ABC6 says, the emails read: “it is important for ABC to know that, prior to our interview with you, Toll Brothers offered to repair our home…” The homeowners had capitulated, changing their stories en masse only moments before ABC6 ran its exposé on Toll Brothers.
Their reversal, however, wasn’t surprising in light of a separate email sent to Han, which uncovered the details of a message that Toll Brothers sent to the frustrated families. In exchange for full repairs, the company demanded that each homeowner send ABC6 the same message: “it is important for ABC to know that prior to our interview with you, Toll Brothers offered to repair our home.” Han says that Toll Brothers also required confidentiality.
Arbitration Keeps Complaints Hidden
As ABC6 notes, arbitration proceedings are often confidential themselves, which means that disputes involving the developer may never come to public attention. Ros Castillo, the Glen Mills homeowner who complained of stucco-related water damage nearly four years ago, doesn’t think that’s “fair, because the next person buying [a Toll Brothers home] doesn’t know what happened.”
Toll Brothers Accused Of Virginia Stucco “Fraud”
Even independent contractors have come out against Toll Brothers construction. In his own investigations, Virginia-based stucco builder RT Bullard has found what he considers proof that Toll Brothers has lied to homeowners in the past about the company’s stucco finishes.
In reality, Toll Brothers has a long history of alleged deception and misrepresentation in the Virginia area. In the early-2000’s, hundreds of homeowners from Virginia and Washington, D.C. filed suit against builders and developers, including Toll Brothers, accusing the companies of misrepresenting synthetic stucco construction as real stucco. According to RT Bullard, who investigated some of the complaints, homes by Toll Brothers were marketed as having stucco details, but had actually been constructed with EIFS, or synthetic stucco.
Bullard also notes that, on a number of Virginia homes, Toll Brothers failed to place flashing over doors and chimneys, allowing rainwater to penetrate underlying wood. Similar lapses, which may constitute a violation of building codes, have been alleged in the developer’s Pennsylvania homes.
In Pennsylvania, Developer Ignites Controversy
Alleged construction defects, however, are just the beginning of the legal challenges by which Toll Brothers has been faced in recent years. Elsewhere, the company has come under fire for planning developments that would wipe out historic landmarks, the Daily Local reports.
In a series of recent planning commission meetings, residents of Westtown Township, just minutes from West Chester, expressed concerns about a proposed residential community that would occupy 322 acres of farmland where the Battle of Brandywine took place. One of the Revolution’s largest battles, Brandywine saw a crushing defeat for the fledgling American army.
Toll Brothers has agreed to meet nearly 50 conditions outlined by the planning commission, including the preservation of historic structures, but current residents and neighboring townships remain dead-set against the development.
State College Water In Jeopardy, Residents Say
Litigation around proposed Toll Brothers’ developments have also spilled over to impact other interested parties. In 2015, the Ferguson Township Board of Supervisors approved Toll Brother’s plan to develop a 264-unit residential development in State College, Pennsylvania.
Local residents, on the other hand, were justifiably troubled by the developer’s proposal, according to the Centre Daily Times. In a lawsuit filed against Ferguson Township, local homeowners and farmers argued that Toll Brothers’ proposed construction would threaten wellfields that supply State College with most of its drinking water. Centre County Judge Jonathan Grine agreed, ruling that the land, zoned for agricultural use, cannot be used for stormwater management facilities until a zoning change or variance is acquired. Toll Brothers has appealed the decision, which is pending in the Pennsylvania Commonwealth Court.
Jeweler’s Row Under Threat, Philly Critics Claim
Toll Brothers’ efforts to develop “City Living” properties have led to a contentious relationship with Philadelphia residents and officials. In 2016, the company demolished the historic Society Hill Playhouse to make way for condo units and parking spaces, according to Philadelphia Magazine, but soon pulled out of the project.
Now, notable critics, including Mayor Jim Kenney, have “lashed out” against Toll Brothers for the company’s efforts to develop a residential high-rise along the city’s historic Jewelers’ Row. Preservationists and local residents have come out strong against the developer’s plan to build a 29-story apartment building on five Sansom Street properties. Toll’s initial proposal was enough to stoke the fire, especially after the company signaled its intent to demolish the existing buildings – along with their historic colonial facades.
In an attempt to halt Toll’s plan, executive director of Greater Philadelphia’s Preservation Alliance Paul Steinke nominated two of the historic structures to the city’s historic register. The Philadelphia Historical Commission has repeatedly delayed ruling on the application. The dispute soon became heated, as vocal leaders of the local community accused Toll Brothers of exploiting loopholes in city law to force its development through under the radar.
Then, Toll Brothers announced plans to nearly double the proposed tower’s height, the Philadelphia Business Journal reports. That sparked Mayor Kenney’s ire. In a “tersely worded” statement issued on December 9, 2017, the Mayor told constituents that he found the company’s intentions “deeply disturbing.” Kenney noted in his letter that he had been left hopeful by talks with Toll Brothers held two months earlier:
“I had hoped from our previous conversations that [Toll Brothers] intended to be a good corporate citizen, injecting much needed investment into the area while still respecting its character, but this information calls that into question.
While, regrettably, the City, including the Historical Commission, does not have the legal ability to stop the project from moving forward, I am urging Toll Brothers to reconsider these decisions. I expect the Civic Design Review Board to make serious recommendations that will respect the historic nature of the properties, and I urge the Toll Brothers to adopt those recommendations or make the necessary adjustments on their own.
If they do not, Toll Brothers will be sending a clear message that they no longer wish to have a productive relationship with the City of Philadelphia.”
Apparently, Toll Brothers had no intention of maintaining a productive relationship with Philadelphia. On January 24, 2017, the developer and designer of Toll Brother’s project, SLCE Architects, submitted its design proposal to the Washington Square West Civic Association.
The 29-story high-rise, reaching 354 feet, would tower over the street’s other buildings, which average three to four stories. The existing facades of Jeweler’s Row will not be preserved.
Toll Bros. Accused Of Racial Discrimination
The company’s business practices have also come under fire, including allegations of racial discrimination, the Penn Record reports. In 2015, two African American adults from Philadelphia accused Toll Brothers and two company employees of singling them out as unwanted intruders at an open house.
The couple first visited a Toll Brothers open house in Newtown Square, driving out to look at a model home in July of 2014. Almost immediately, however, they were approached by Sheree Elgart, a sales associate at Toll Brothers, who quickly questioned their reason for attending, court documents state. Elgart made no similar demand for explanation from the open house’s Caucasian visitors, plaintiffs claim. One month later, the couple returned to the open house, but their presence, the suit says, was again questioned. “At no time did Elgart approach and question any Caucasian individuals who were also in the home,” the complaint reads.
“You People Can’t Come Here”
As the couple inspected the home, they picked up several complimentary items in the kitchen: two water bottles and two cans of iced tea. But as they were leaving, Elgart approached the plaintiffs – again – and railed off a series of racially-charged accusations, the couple claims. “Time for you people to leave,” the sales associate allegedly said, “you people can’t come here – it’s not a supermarket.” Elgart even went up her chain of command, according to the lawsuit, finding her supervisor to push the point home. The supervisor, court documents say, also demeaningly informed the couple that the model home was not a “supermarket.”
The couple’s civil lawsuit, which alleged violations of the Federal Fair Housing Act, was filed in the US District Court for the Eastern District of Pennsylvania on August 19, 2015. It was logged as case number 2:15-cv-04270-PBT.
Canceled Contracts, Broken Dreams
Toll Brothers sells more homes in Washington, D.C., Virginia and Maryland than any other developer. The company even operates its own mortgage company, TBI Mortgage, which is licensed in 20 states. While home buyers are free to choose the mortgage lender of their choice, selecting TBI Mortgage comes with perks. As NBC Washington reported in 2014, many prospective Toll Brothers customers go with TBI “because they [are] promised free upgrades.”
Those extras were enough to convince Edward Singleton, a special education teacher, to sign on with Toll Brothers and TBI Mortgage. Singleton contracted to buy a home in Loudoun County, Virginia, after spending almost a decade saving up the $20,000 deposit. But after signing the contract, his mortgage application was declined. Singleton lost both his dream home and his $20,000 deposit.
TBI Mortgage never ran a pre-approval check on Singleton’s finances. The company just gave Singleton a green light, accepted his money and then canceled his contract, the teacher says. In fact, TBI Mortgage didn’t pre-approve one loan between 2009 and 2014. The company did, however, deny a lot of mortgages. From 2006 to 2014, Toll Brothers made over $125 million in revenue by “seizing down payments from cancelled contracts,” according to Securities and Exchange Commission filings obtained by NBC. In fact, a class action lawsuit filed in Maryland accused Toll Brothers of making more money on canceled contracts than selling houses – a primary reason why the company was able to stay afloat during housing crisis.