By Lyonel Doherty, Times Chronile
A group of modular homeowners in Oliver are calling for justice after their dispute with a builder has left them scrambling to recover what they claim to have lost.
Megan and Brendan Carrigy, who are building a home at Oliver Heights on Copper Road, love the community but their dream of living here has turned bitter.
The Carrigys said they signed a fixed-price contract with the builder whom they won’t name (but the Times Chronicle has identified him as David Perehudoff from Step 5, a modular building company). They said their unit was supposed to be finished in May of 2021. However, a year later the Carrigys were still not in their home and became increasingly frustrated with the builder’s perceived lack of progress. So, after consulting legal advice, they took over the building contract to finish the home themselves.
The couple said they subsequently learned that Perehudoff was not licensed and are now warning people to ensure their modular builders are properly licensed to qualify for homeowner warranties.
“Brendan and I never did that. We didn’t know. We never had to worry about it before, ever. We were sitting ducks.”
But Perehudoff said Step 5 is not unlicensed to build modular homes, noting they have “permits to build modular homes” under CSA A277.
David Perehudoff. Lyonel Doherty photo
But the Carrigys say that is only half the problem. They argue that a “loophole” exists in CSA A277, a standard for certifying compliance of factory-built homes. Megan said there is an exemption that allows unlicensed builders to construct homes without providing a warranty and in some instances use unqualified trades.
The Homeowner Protection Act exempts manufactured homes including factory-built homes from requiring home warranty insurance and builder licensing. Megan said that A277 needs to be tightened up so that less of the home can be built by unlicensed constructors with no warranty coverage.
Brendan also said if any part of the modular unit is altered or changed, the manufacturer’s warranty is void.
“Personally, if I was to do it all over again, until government gets organized to protect the consumer, I would not do modular,” she said. “I love the concept of modular, but the consumer must educate themselves first by doing thorough research on the modular build industry to ensure they are not exposed.”
But Perehudoff stated Step 5 offers new home warranty on all of its units through Pacific Home Warranty Insurance Services.
Gord Rattray from the Manufactured Housing Association of BC said CSA A277 is not a loophole but simply a “standard” in the province.
In the case of the Oliver dispute, Rattray said Step 5 is responsible for all on-site work on the property, and that the couple’s only recourse is litigation.
Perehudoff told the Times Chronicle that most of the delays were caused by COVID-19 and related supply chain issues. He said the Carrigys expressed a desire to pay for all of the materials and subcontract work directly. He agreed to that and informed the trades and suppliers that the couple would pay them. But that didn’t happen, which resulted in turmoil, according to Perehudoff.
Brendan said that these trades were specifically contracted to the builder, not them.
He noted they initially suggested a “conditional offer” to pay the trades directly but that was rescinded.
Brendan said there was nearly $50,000 in unpaid trades which had not been disclosed by the contractor.
The Carrigys claim there were product substitutions and nine contract defaults relating to the building of their home. They say the contractor used unqualified trades to install the rough-in for their heating system which is non-functioning. This resulted in a voided manufacturer’s warranty.
Perehudoff said he tried to meet with the Carrigys but they refused, adding the couple also refused to arbitrate the matter. He claimed their lawsuit against him was stayed in the courts because they were in breach of contract, but the Carrigys say civil action was stayed “temporarily” pending the outcome of arbitration. “There was no default (by us),” Megan stressed.
According to the builder, the Carrigys locked him out of the property on May 7, but all subcontractors stayed on the job.
Perehudoff said that all work completed to May 7 was to industry standard or better. He claimed the Carrigy’s unit is not being completed with proper supervision. But the couple say supervision was already lacking on the site.
“Their house has no warranty nor is it properly CSA supervised as the Carrigys did faulty modifications to the unit,” Perehudoff said.
He further claimed that the couple completely changed the ventilation system approved under CSA. This would void any manufacturer’s warranty on the home, he said.
Perehudoff said he asked town staff to put a stop-work order on the property, but they refused.
Randy Houle, the town’s director of development services, said Perehudoff is no longer involved in Oliver Heights but is working as a modular home builder on the property.
“He’s working on individual lots in phases on behalf of the property owners,” Houle said.
The director confirmed the town is working with Perehudoff on the building permits.
The Town has worked with Perehudoff in the past on the Oliver Landing housing project on Sawmill Road.
Some controversy arose when the town’s building inspector authorized stop-work orders on two units for inadequate insulation. In addition, a number of tradespeople reported that invoices for their services were never paid in full, resulting in liens.
In the end, Perehudoff left Oliver Landing to focus his attention on Oliver Heights, but subsequently formed his own company to build the modulars.
The Times Chronicle spoke to three trades, including an electrical and concrete company who reportedly have outstanding invoices with Perehudoff, but they did not want to go on the record. One stated they still have an unpaid invoice from Oliver Landing.
But Perehudoff said the only unpaid trades are the ones that the Carrigys promised to pay and refused. But the Carrigys say the unpaid trades are contracted to the builder as part of the fixed price contract. They stress there was no agreement for them to assume the obligation of paying the trades.
In any event, he said Step Five would love the opportunity to meet everyone in a forum to discuss these outstanding issues.
Josephine Wilson, the first owner to get a modular built at Oliver Heights, said she is happy with her home, noting it is a quality product.
But when COVID hit, material prices skyrocketed and there were significant delays.
Wilson said she hopes that under new management that communication can be restored between homeowners and the developers.
“This is an awesome place to live even through all the troubles,” she stated.
But homeowners Denise and Tony Barnfield expressed their frustration to the Times Chronicle , saying they don’t want anyone else to endure what they had to endure.
The Barnfields said despite promises no work has been completed on their home since November 2020.
Oliver Heights drawing. Contributed photo
Last summer their air conditioner broke down and they tried to get the builder to address the problem, but they ended up doing it themselves.
“We feel our hands are tied. It has become so complicated that the only support we have is from friends and neighbours.”
Perehudoff said Step 5 has nothing to do with the Barnfield’s issues under the Oliver Heights development. “We did help the Barnfields with some issues as a gesture of good faith . . . a basement remodel for them as a favour to Oliver Heights.”
Modular homeowner Brian Davies said he agreed on a contract with Perehudoff, but work came to a halt during the pandemic.
“He kept me updated with more promises of getting the project going again but never did. He promised November completion, then Jan 1, then Feb, March and so on. He hasn’t touched the project since mid- summer of 2021.”
Davies said he advanced Perehudoff $231,000, and so far there is a half-completed basement on the lot now.
“I likely have little chance of recovering my money from him,” Davies said.
Fellow homeowner Doug Wesley said he initially felt good about getting involved in the Oliver Heights development and subsequently entered a contract with Perehudoff with deposits.
“If you go look at our lot right now, there’s nothing there but sand, nothing’s been done, nothing at all.”
Wesley said the build keeps being put off. “Every month it’s ‘hope to start at the end of the month,’”
He estimates he is out $200,000, noting he had to leverage a house in Surrey to borrow money to build at Oliver Heights.
“David needs to do one of three things: lead, follow or get out of the way, and I would prefer the last,” Wesley said.
He admitted not having much hope in seeing his $200,000 returned. “This was part of our retirement plan . . . now we’ve got nothing, a plan, a nice piece of paper.”
Perehudoff said he could not comment on the other owners’ situations because legal action is pending.
The builder did say he has engaged the services of the BC Ombudsperson to help resolve issues with the Town of Oliver regarding its development and permitting obligations.
For more information on CSA A277 and the Homeowner Protection Act visit bchousing.org.
