Homebuyers go to court to fight for dream home

Couple accuses contractors, housing agency of fraud

March 06, 2000|By Eric Siegel | Eric Siegel,SUN STAFF

The basic story is all too familiar: First-time buyers purchase a home, encounter unexpected problems with the property and wind up filing a lawsuit, charging fraud and misrepresentation.

What makes the experience of Marshall and Sharon Freedman unusual is that the principal target of their court action is not a real estate firm or mortgage company, but a nonprofit housing and development agency that includes as part of its mission encouraging homeownership.

The suit by the Freedmans in Baltimore Circuit Court, scheduled for trial in July, names as the lead defendant Comprehensive Housing Assistance Inc., or CHAI, an agency of The Associated: Jewish Community Federation of Baltimore, and two of its employees.

It also names A & A Plumbing Inc. and its principal, Jerome Stephens, a contractor recommended by CHAI who allegedly failed to complete promised repairs on the house, and two other contractors who helped A & A obtain its permits.

Asking $400,000 in damages, the suit charges that the Freedmans bought their semidetached home in Northwest Baltimore based on "fraudulent assertions" by CHAI that it would oversee needed repairs on the property, and that the work would cost no more than a $10,000 renovation loan the agency would provide.

The Freedmans -- who say they had to borrow more than twice that amount from their family to correct poorly done work and have the repairs done properly -- said in an interview that they are especially distressed that their problems stem from their dealings with a nonprofit organization whose mission, in part, is to help young Jewish couples such as themselves.

"It's hurtful and shameful," said Marshall Freedman, 37, a $34,000-a-year civilian technician with the Maryland State Police and father of three young children.

CHAI, which provides housing aid annually to dozens of seniors and first-time homebuyers in Northwest, denies any wrongdoing and seems equally perturbed that it is a party to the lawsuit.

"Our position in this litigation is that we shouldn't be there," said Elizabeth Sarah Gere, who represents CHAI. "We made a noninterest loan that had certain conditions. I view us as sort of the bystander.

"This is an organization that does a tremendous amount of good for the community," Gere added. "The organization wants to maintain its role in the community not as a litigant but as a contributing member."

In court papers, Gere argues that any damages sustained by the Freedmans were not the result of actions by CHAI, but of the contractors.

But A & A Plumbing and Stephens rebut that line of reasoning, arguing in part that CHAI's position may be barred by "contributory negligence."

Thomas Patrick Stephens, the attorney for A & A Plumbing and Stephens, declined comment beyond the public filings in the case.

The Baltimore Circuit Court suit, filed last year, is not the only legal action arising since the Freedmans' purchase of their home in the 3400 block of Ludgate Road in December 1997.

In July 1998, after a complaint by Marshall Freedman, Jerome Stephens was found guilty in Baltimore District Court of doing general contracting work without the proper license and sentenced to two years' probation.

Last month, after another complaint by Freedman, Stephens' plumbing license was suspended for 30 days by the Maryland State Board of Plumbing, a board spokesman said. The board found after an administrative hearing that Stephens failed to complete work on the Ludgate Road home in a "competent manner."

Two years of legal proceedings was not what Marshall and Sharon Freedman envisioned when they began searching for a home in fall 1997.

With one young child and a second on the way, the couple began considering buying a home. As apartment dwellers in Northwest, they were aware of fliers put out by CHAI, such as the one with a drawing of a ball and bat that said, "Now you can afford to own your own HOME. RUN right to CHAI for information about special financing programs."

In one recent year, CHAI helped 37 families buy homes in Park Heights, Colonial Village and Milbrook, according to the group's most recent biannual report. It also helped more than 100 low-income seniors remain in their homes by providing aid for home repairs and maintenance, and helped develop affordable senior housing with public and private money, the report said.

CHAI has an annual income of about $1.1 million, of which about $280,000 comes from The Associated and $60,000 comes from a grant from the city, according to interviews and documents.

To the Freedmans, CHAI offered a $15,000 interest-free loan -- $5,000 for closing costs and $10,000 for electrical, plumbing and carpentry repairs -- which would be forgiven if they stayed in the home nine years.

According to the suit filed on the Freedmans' behalf by attorney T. Allen Mott, CHAI steered the couple into signing a contract with A & A Plumbing, then strong-armed them into agreeing to pay an additional $4,697 for repairs -- charges the group denies.

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