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Document Page The Top Ten Questions Offer Ltr & Release Info. NOTE: NEW and modified entries are designated by the word NEW in red. Latest additions/clarifications: 22 Dec. Pulte's KITEC Settlement Offer Program
Here we provide information in a Q & A format on the details of Del Webb/Pulte's KITEC settlement program. Pulte’s Settlement Offer By now every affected homeowner should have received a letter from Pulte outlining how they propose to handle the alleged constructional defect concerning the installation of KITEC fittings. What, you say, you did not get that letter. In fact, no one received such a letter since Pulte did not plan to send out a general letter notifying affected homeowners of their settlement plans. What Pulte decided to do, instead, was to negotiate individually with each homeowner separately, giving the homeowner 35 days in which to decide whether to accept the “deal or no deal” on their offer to settle the construction defect matter. NEW TIME What about the resident meetings scheduled to take place on Jan. 4th at 3:00 and again on Jan 7th at 6:00 p.m? As recommend by Favil West, do not take any action until after you have attended one of the residents meetings at either 3:00 or at 6:00 p.m. on 4 January, Thursday. NEW Why must the homeowner and not Pulte assume responsibility for securing contractural services in the amount of $7,800 for remedying an alleged constructional defect by the Developer? We do not know. While Pulte can guarantee delivery of necessary repairs, it's not clear that local contractors will always be in a position to do so for the period of time needed to complete the work for all affected homes and for the price that Pulte is offering. What Pulte is Doing? It would appear that Pulte has arranged to have the KITEC matter fully resolved to the homeowner’s complete satisfaction, assuming that the proposed offer of $7,800 is all that will be needed (now and in the future) to compete the task of remedying the construction defect. NEW Are there matters about Pulte's settlement program that have not been disclosed? Yes! Please read on. The “Inspection” and Scheduling Following the submission of the "Inspection Request Form" to Del Webb/Pulte, residents may be contacted by either a Pulte employee or by Southwest Consulting, a firm affiliated with Koeller, Nebeker, Carlson & Haluck that was hired by Pulte to conduct “an inspection” to determine whether your home was plumbed using KITEC fittings. Someone representing IPEX, the manufacturer of KITEC, may or may not accompany that inspector. An "inspection" may occur before or after you receive the offer letter. Following that inspection, you will receive an offer letter advising you of the terms and conditions. We understand that all offer letters are the same. The homeowner can then proceed to contract with the designated plumber and drywall/painting contractor to perform the necessary repairs to your home. NEW What does the “Inspection” consist of? The inspection is quite short and typically includes two parts: 1) a check to verify that a KITEC sticker is located in the electrical breaker box located in the garage, and 2) a check of the attic to verify that the home was not plumbed in the attic. Since the Kitec piping system was burried underground, Kitec plumbed homes should not have plumbing in the attic like all Phase 2 model homes have. Phase 2 homes were typically constructed in 2003 and the following years. However, a few Phase 1 homes were NOT plumbed using the Kitec plumbing system. NEW When will your home inspection take place? According to the legal firm handling the scheduling, inspections are taking place as soon as possible, but in some order. For example Unit 15 homes (constructed in 2001-02) are not scheduled to be inspected until about about March 2007. NEW What about a casita? Are they covered by this program? Del Webb-built casitas would be covered by Pulte's program if the Kitec plumbing system was used in the construction of the casita. Whether or not the Kitec plumbing system was used in the construction of Del Webb-built casitas is not known. NEW Is it true that homeowners are receiving Settlement Letters without anyone doing an Inspection of their home? Yes! But we understand that an "inspection" will be scheduled eventually if the homeowner accepts the offer by returning the release form. What is the offer? Homeowners who agree to accept the offer from Pulte will be given a lump sum of $7,800 to contract with designated contractors who will perform the repairs. That sum is regardless of the size of the home, whether 1100 sq. ft. or over 3,000 sq. ft. Pulte has entered into a special arrangement with the designated contractors to accept $4,800 for the plumbing work and $3,000 for the drywall, stucco and painting work, without regard to the amount of time, effort, or the size of the project. One price fits all. What if you do not want to accept the offer? No one is obligated to accept the offer of the work that Pulte is offering to remedy the KITEC issue at no cost to the homeowner. In fact, if the offer is not acted upon within 35 days, the offer is null and void. NEW Can you accept the cash offer and not have the work done? Yes. NEW Should you accept the cash and not have the work done? Such a risk would appear to be unacceptable, at least based on a recent report in a plumbing blog. According to a man in Texas who recently purchased a home that had been plumbed with Kitec, he then experienced $20,000 in water damage to his home which he attributed (correctly or not) to a Kitec related problem. The point is not to suggest he was correct in his assessment of the matter, but to caution residents who may decide not to have the work performed. Also, resale of homes not repaired could become a serious issue down the line if virtually all other homes on the market at that time have been repaired. Full disclosure will be a requirement of any sale. NEW What if something like a water leak should occur between the time you execute the release and before the repair is performed, which can be a year or more away given the number of homes involved? Who is liable under that circumstance? It may depend on whether the home is still under warranty by Del Webb. However, since the normal warranty period in the case of plumbing is 2 years (or less) from the date of closing, it is unlikely that any Phase 1 homes are still covered by Del Webb's warranty. DW's practice of extending that warranty period beyond the two-year period under certain cirsumstances is at their discretion. NEW What does DW's warranty provide or exclude? For warranty information, refer to your "Del Webb Home Warranty" booklet of about 20 pages, which changes as the Edition changes.
NEW Who is liable for plumbing repair that is needed following the newly installed plumbing system that will replace the Kitec plumbing system? One assumes that it would be the local plumbing contractor who performed the repair rather than the Developer. NEW What are the tax implications on the homeowner of accepting Pulte's offer and having the work performed? None, based on my understanding of IRS Publication 525, Taxable and Nontaxable Income, page 29, which in part states as follows, although tax advice should normally come from a tax or financial professional. You may receive a 1099 for the amount, so keep records in the unlikely event the IRS should inquire or audit:
What do the repairs consist of? 1. In the case of the plumbing, the project consists of a complete re-plumbing of both the cold and hot water lines in the home, from the attic down. The work will be limited to the elimination of the KITEC fittings and the installation of new plastic pipe from the attic down. 2. Kitchen Islands. However, there is one exception, Kitchen Islands. There is no way to re-plumb the kitchen islands from the attic down without jack-hammering the concrete to the nearest wall. Jack-hammering is not included in the agreed upon repair or amount. If the homeowner wants, they can pay an additional amount for this work. Also, the homeowner would be responsible for the cost to replace and repair the tile, etc. and any related repairs as a result of the jack-hammering. 3. In the case of the Kitchen Islands, the contractor will replace the KITEC fittings below the kitchen sink and will reroute the underground plastic pipe from the point that it emerges from the concrete slab and will connect that line to their new manifold setup for distributing the water. In other words, the old distribution lines above the level of the floor will be entirely disconnected. That Kitchen Island line will be the only underground line that will be used when the job is completed. 4. In the case of the walls, there will be minimal cuts to repair, e.g., only at the very top and at the bottom. Every effort will be made to match the paint. Plastic. What is the quality of the contractor’s workmanship? According to a homeowner who has had this work performed, the workmanship was excellent. Is there anything that is not covered? 1. The work will NOT cover the replacement of corroded fittings and joints at the water heater since that work is deemed to be outside of the scope of the KITEC problem. That corrosion buildup that is largely visible was identified as a homeowner’s “maintenance” issue and unrelated to the KITEC problem. [If those water heater related fittings were of inferior quality and they happen to readily corrode and get clogged up over time, that’s a homeowner's maintenance issue.] 2. Currently, no determination has been made with respect to the repair of damaged wallpaper. Is the plumbing work problem free? Not necessarily. In the process of re-plumbing, built-up debris in the line may be dislodged. That in turn could create unintended flow problems, such as at the point of exit. This will all be explained to the homeowner at the time the work is performed. How long will the work take? Pulte estimates 8 hours. That may be with the superman crew. Looking only at the plumbing work on a recent Sun City home, it took a crew of 4 plumbers working full-time about 2-1/2 days. That's equivalent to 80 hours of work. NEW What is the significance of Pulte's "8 hours" work estimate? That's not entirely clear. Is the "8 hours" estimate merely an estimate, or does the amount of time specified by Pulte carry some undisclosed meaning for the designated vendors? NEW Under what conditions may the designated vendors opt out of the agreement to perform the work at the designated amounts? We do not know. NEW What are the terms of Pulte's agreement with American Leak Detection and K & R Painting & Drywall? We do not know. NEW What is the nature and extent of American Leak Detection and K & R Painting & Drywall commitments to perform the work at the amounts being offered by Pulte? We do not know. Will the work be performed under a City permit? Yes, the contractor will take out and pay for a work permit with the City to perform the job. As a result, the work will be inspected by a City inspector. NEW What if you did not return the "Inspection Request" form?" First, Pulte is committed to repairing all 3,000+ homes in Sun City that have the Kitec fittings problem. If you did not return the "Inspection Request Form," you are NOT on the list of homeowners with homes to be inspected. Therefore, you will not be contacted with a settlement offer. To receive a settlement offer, you must file the "Inspection Request Form." To get on that list of homes to be inspected, you can do either of the following, according to Pulte’s legal representative handling the matter at Koeller, Nebeker, Carlson & Haluck:
NEW What about the requirement to submit the form within 30-days of your receipt of Pulte’s letter? Can late comers still have an inspection and take advantage of the settlement offer? Yes. See the above response. If you have any additional questions, please let me know and I will attempt to obtain an answer for you. Ron Johnson, 14 December 2006, Rev 22 Dec.
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