Developer To Pay $1.3 Million Over Shoddy House-Flipping Claims In D.C.

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A Virginia couple accused of overseeing the shoddy renovation of dozens of D.C. homes they later sold has agreed to pay over $1 million in restitution to buyers. The developers also will be banned from doing any future construction, renovations or sales of any properties in the city.

Insun and Jefferson Hofgard — who live in Great Falls and bought, renovated and sold dozens of residential properties in revitalizing D.C. neighborhoods starting in 2012 — signed the agreement with D.C. Attorney General Karl Racine last week, just over a year after Racine sued the couple over allegations they “performed sub-standard construction work, used sub-standard materials, and made renovations or repairs that were of sub-standard quality.”

A D.C. judge signed off on the agreement earlier this week.

“[The] settlement makes amends to homeowners who were victims of shoddy and dangerous renovations and ensures that these house flippers cannot harm another District resident,” Racine said in a written statement. “This settlement also sends a strong message that the Office of Attorney General will hold accountable anyone who violates the District’s consumer protection laws and takes advantage of our residents.”

In May 2015, WAMU 88.5 reported on the Hofgards’ shoddy home renovations as part of a three-part investigative series on home-flipping, Flipped Off: In D.C.’s Thriving Market for Renovated Homes, It’s Buyer Beware.

In most cases, the couple purchased old D.C. homes in quickly revitalizing neighborhoods like Columbia Heights, Petworth and Bloomingdale. Insun Hofgard then renovated them, often using unlicensed contractors, working beyond the scope of the permits they were granted and selling them before final inspections were completed. Load-bearing walls were removed, electric and gas lines were not properly installed and additions were added without the proper zoning approvals. In one case, the Hofgards finalized the sale of a home after city regulators ordered them not to.

The Hofgards were fined $301,500 for hundreds of construction-related violations last November, but the new agreement creates a means for their buyers to recoup some of the money they may have lost in making repairs or for the loss of value their homes suffered once problems surfaced.

As part of the agreement, the Hofgards will pay $1 million towards restitution for their buyers, all of whom will be able to file claims for the money. The $301,500 in fines they recently paid will also go toward restitution. If the cost of the claims exceeds that combined amount, the agreement allows the city to request more money from the Hofgards. They are also required to pay $300,000 to cover the city’s legal expenses during the year-long litigation.

Racine’s office has identified 19 property owners that could qualify for money, though it says there may be more. To claim money, buyers can either detail how much they spent or have to spend to bring their home up to code, or determine the difference in the value of their home from when they bought it and what it is worth with all the problems that have been uncovered.

The agreement does allow the Hofgards to request permission to repair and sell properties they still own in the city, many of which have remained unfinished and abandoned since last year. But beyond that, the agreement orders the Hofgards to “cease all activities in connection with the construction, offer or sale of residential real-estate in the District of Columbia.”


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