Montgomery County has tightened its licensing rules for homebuilders and sellers to give buyers greater protections.
Legislation approved this month by the County Council updates the county’s 30-year-old laws requiring that builders register with the county and offer a warranty to cover certain defects that could crop up years in the future.
The updates were needed to account for new business models of some homebuilders, said Eric Friedman, director of the county’s Office of Consumer Protection.
Some limited liability corporations – known as LLCs — can file articles of incorporation paperwork with the State Department of Taxation for $100 or less and Friedman said a home buyer could potentially purchase a home from a defunct legal entity. Or unlicensed builders selling homes and could jeopardize homeowners’ ability recover losses incurred as a result of an unsatisfactory home improvement job, he said.
“You typically see this business model in Bethesda and Chevy Chase where they do infill construction, where they go into an old subdivision, tear down an old house and build a larger house,” Friedman said of the LLC model.
The updated regulations change the procedures for builders so that they must apply for a home builder’s license with the Office of Consumer Protection and then obtain a building permit from the county’s Department of Permitting Services.
The new rules also require both the seller and the builder to provide a warranty to guard against a builder selling a home to an LLC and then disbanding.
Friedman also said the bill addresses problem of builders providing false information on their application for a homebuilder’s license by claiming they are building homes for their family, which exempts them from licensing requirements.
The sponsor of the legislation, Councilman Craig Rice, a Democrat who represents upcounty areas, said during a public meeting on the changes that they were prompted by a call from a Washington television meteorologist, Doug Kammerer, who was one of three residents to lodge complaints with the consumer protection office last year that the Bethesda home builder JRK Contractor LLC performed work that resulted in structural deficiencies.
JRK was also alleged to have forged a homeowner’s signature on an application and the entering into of two contracts before the builder obtained a license, according to the consumer protection office. The office of consumer protection has revoked JRK’s license, but the contractor has appealed the decision in Montgomery County Circuit Court and the case is scheduled for a hearing in July.
JRK co-owner Fernando Guedes Jr., said in an interview that the county is trying to scapegoat his organization and that ultimately the county made a mistake by not contacting his company about the violations.
“Eric Friedman is truly the one who is wrong for all this stuff. He makes us into a villain,” he said. “They’re running behind closed doors. The biggest question is why doesn’t the county offer a review?”
Guedes also said Kammerer’s prominence prompted the county to take action against him. He said if he loses his appeal in Circuit Court, he plans to appeal the decision to the U.S. Supreme Court. In the meantime, he plans to continue operating his business in Montgomery County and said he still has the legal authority to build homes, which Friedman disputes.
“One hundred percent false. Their license has been revoked. They are not capable of pulling any permits, and it is illegal for them to be building any homes in Montgomery County,” Friedman said.
Friedman said Guedes is permitted to make improvements to homes around the state, but he can’t obtain a building permit for residential construction in the county.
Asked about the charge that Kammerer’s visibility in the Washington media market led to JRK losing its license, Friedman noted that his office didn’t take any action against the contractor until two other homeowners had lodged complaints after Kammerer’s.
According to state court records, Guedes and his father, Fernando Guedes Sr., were involved in 14 civil suits throughout 2017 and 2018 that included charges of breach of contract and liens.
Kammerer said he suffered $400,000 in damages because of Guedes’ performance.
“This guy didn’t live up to any other warranties in my contract,” Kammerer said.
Dan Schere can be reached at Daniel.schere@moco360.media
