Builder Quality Due Diligence Framework: How to Research New Construction Builders Without Getting Burned

Why: Builders sometimes operate under multiple LLC names; need to research correct entity

Where: Massachusetts Secretary of State business search (sec.state.ma.us/cor)

What to find:

Full legal name of entity

Date of incorporation/formation

Current status (active, dissolved, suspended)

Principal office address

Registered agent

Officers/managers (if disclosed)

Red flags:

Incorporated < 2 years ago (new entity, no track record)

Dissolved or suspended status (not operating legally)

Multiple recent LLC formations (may indicate bankruptcy avoidance strategy)

Address is residential or PO box (not professional operation)

Massachusetts: Home improvement contractor registration required (Office of Consumer Affairs)

Verify: Registration number, expiration date, status

Website: mass.gov/consumer-protection

Red flags:

Not registered (illegal to operate)

Recently registered despite claiming years in business (why?)

Expired or suspended registration

Request: Certificate of insurance

Verify covers:

General liability: $1-2M minimum

Workers' compensation

Builder's risk insurance

Check: Certificate is current and names builder correctly

Red flags:

Refuses to provide certificate

Insurance expired or insufficient coverage

Different business name on insurance (entity confusion)

Massachusetts: MassCourts electronic case search (masscourts.org)

Federal: PACER federal court records (pacer.gov)

Search by: Builder's legal name (exact match)

Search as: Both plaintiff and defendant

Timeframe: Last 10 years minimum

Construction defect lawsuits:

Allegations of poor workmanship

Water intrusion, mold, structural issues

Building code violations

Warranty dispute lawsuits:

Builder refusing to honor warranties

Homeowners suing for warranty enforcement

Breach of contract:

Builder not completing work

Builder not delivering as promised

Consumer protection violations:

Chapter 93A claims (MA consumer protection)

Unfair/deceptive practices allegations

Bankruptcy filings:

Builder seeking bankruptcy protection

Leaves buyers with incomplete homes, worthless warranties

Lawsuit volume:

Calculate: Lawsuits ÷ number of homes built

Quality builders: < 5% litigation rate

Moderate: 5-10% litigation rate

Poor: > 10% litigation rate

Example:

Builder has built 200 homes in 10 years

Has 15 lawsuits alleging construction defects

Litigation rate: 15 ÷ 200 = 7.5% (moderate concern)

Lawsuit patterns:

Single lawsuit: May be frivolous or one-off issue

Multiple lawsuits alleging same defects: Pattern of systemic problems

Class action: Affects multiple homeowners (major red flag)

Outcomes:

Builder prevailing: Lawsuits may have been frivolous

Settled: Unclear (settlements often confidential)

Builder losing: Evidence of actual problems

10+ lawsuits alleging construction defects

Pattern of water intrusion or structural issues (same problem across multiple homes)

Class action lawsuit pending or filed

Bankruptcy filing within 10 years (leaves buyers unprotected)

Multiple Chapter 93A judgments (unfair/deceptive practices)

Website: bbb.org

Search: Builder's business name

Review:

Overall rating (A+ to F)

Number of complaints (last 3 years)

Complaint types

Response rate and time

Resolution rate

Rating:

A+ / A: Excellent reputation

B+ / B: Good reputation

C or below: Significant concerns

F / Not Rated: Major red flag

Complaint volume:

< 5 complaints per 100 homes: Acceptable

5-10 complaints per 100 homes: Moderate concern

> 10 complaints per 100 homes: Poor

Complaint types:

Quality/workmanship: Most serious

Warranty service: Indicates responsiveness problems

Communication: May indicate process issues

Timeline delays: Common in construction, less serious

Response patterns:

Responds quickly and resolves: Good sign

Slow response or no response: Red flag

Disputes every complaint: Defensive, uncooperative

BBB rating C or below

Pattern of unresolved complaints

Builder doesn't respond to complaints (non-responsive)

Multiple complaints about same issues (systemic problems)

Complaints escalating over time (quality declining)

Visit: Town building department where builder has projects

Request: Public records for builder's recent projects (last 2-3 years)

What to review:

Building permits issued

Inspection records

Failed inspections

Stop-work orders

Code violations

Certificates of occupancy (final approvals)

Inspection failure patterns:

Occasional failures: Normal (inspectors are strict)

Repeated failures for same issues: Poor quality control

Failures on critical systems: Electrical, structural, fire safety

Stop-work orders:

Indicates serious code violations or safety concerns

Multiple stop-work orders = major red flag

Permit violations:

Working without permits

Not following approved plans

Unauthorized changes

Timeline patterns:

Long gaps between inspections (may indicate delays, problems)

Unusually fast approvals (may indicate inadequate inspection)

Multiple stop-work orders

Pattern of electrical or structural inspection failures

Working without permits (illegal and uninsured)

Significant deviations from approved plans (not following code)

Difficulty obtaining certificates of occupancy (code compliance issues)

Clean permit history (few violations)

Passes inspections on first or second attempt (good quality control)

Timely responses to inspector requests

Certificates of occupancy issued without major delays

Google Reviews: Most comprehensive

Houzz: Construction-specific reviews

Yelp: Mix of reviews

Facebook: Business page reviews

Builder's website: Read testimonials skeptically (curated by builder)

Overall rating:

4.5-5 stars: Excellent

4.0-4.4 stars: Good

3.5-3.9 stars: Moderate concerns

< 3.5 stars: Poor

Review volume:

> 50 reviews: Statistically meaningful

< 10 reviews: Too few to judge

Review recency:

Recent reviews (last 6-12 months): Current quality

Old reviews only: May not reflect current operations

Review patterns:

Consistent themes: Indicate systemic strengths/weaknesses

One-off complaints: Less meaningful

Quality/workmanship:

"Fit and finish excellent"

"Attention to detail"

"Construction defects discovered after closing"

"Poor quality materials"

Warranty service:

"Builder responsive to warranty claims"

"Refuses to honor warranty"

"Takes months to fix issues"

Communication:

"Kept us informed throughout process"

"Disappeared after closing"

"Difficult to reach"

Timeliness:

"Completed on time"

"Months behind schedule"

"Constantly changing completion dates"

Discount:

Overly positive 5-star reviews (may be fake or incentivized)

1-star reviews with emotional language and no details (may be vindictive)

Reviews unrelated to construction quality (sales process, design center, etc.)

Focus on:

3-4 star reviews with balanced assessments

Detailed reviews describing specific issues

Reviews from verified purchasers

Recent reviews (last 12 months)

Multiple reviews mentioning same defects (water intrusion, HVAC problems, etc.)

Pattern of warranty service complaints

Recent reviews significantly worse than old reviews (quality declining)

Builder doesn't respond to negative reviews (ignores feedback)

Very few reviews despite years in business (may be suppressing reviews)

Ask builder: "Can you provide addresses of homes you built in the last 2-3 years?"

Why 2-5 years: Issues become visible over time; too new = problems haven't emerged

If builder refuses: Major red flag (hiding something)

Alternative: Drive through builder's developments, note addresses

Criteria:

Similar model/price point to what you're buying

Completed 2-5 years ago (issues visible)

Different lots/locations (test consistency)

Contact owners:

Look up ownership via town assessor's database

Send letter or knock on door

Offer small compensation for time ($50-$100)

Look for:

Overall condition (well-maintained?)

Siding condition (warping, gaps, water stains)

Roof condition (sagging, missing shingles)

Landscaping grade (water pooling near foundation?)

Driveway condition (cracking, settling)

Visible construction quality

Red flags:

Water stains on siding or under eaves

Foundation cracks visible from street

Poor site drainage (water pooling)

Inconsistent building materials or design

Questions to ask:

"How long have you lived here?"

"What has your experience with the builder been?"

"Have you had any construction defects or issues?"

"How responsive was the builder to warranty claims?"

"Were there any surprises after closing?"

"Any issues with HVAC, plumbing, electrical, roof, foundation?"

"How's the home held up over time?"

"Would you buy from this builder again?"

"Any advice for someone considering buying from them?"

Listen for:

Enthusiasm vs. hesitation (body language matters)

Specific problems (water intrusion, HVAC failures, warranty disputes)

Builder responsiveness (quick fixes vs. ignoring problems)

Patterns across multiple owners (same issues = systemic)

Red flags:

"I wouldn't buy from them again"

"They disappeared after closing"

"We've had constant issues"

"They won't honor the warranty"

"Our home has [specific defect] and so do several neighbors'"

What to look for:

Fit and finish quality:

Floor issues:

Drywall:

Plumbing:

HVAC:

Windows/doors:

Red flags:

Multiple significant defects visible

Water stains on ceilings/walls

Uneven floors (settlement issues)

Windows fogged (seal failure)

HVAC struggles to maintain temperature

Years in business:

10+ years: 5 points

5-10 years: 3 points

2-5 years: 1 point

< 2 years: 0 points

Licensed & insured:

Fully compliant: 5 points

Missing insurance or expired: 0 points

Financial stability:

No bankruptcy history: 5 points

Bankruptcy > 10 years ago: 2 points

Bankruptcy < 10 years ago: 0 points

Ownership transparency:

Clear ownership, meets buyers: 5 points

Corporate structure, no direct access: 2 points

Unclear ownership: 0 points

Litigation rate:

< 5% of projects: 10 points

5-10% of projects: 5 points

> 10% of projects: 0 points

BBB rating:

A+ or A: 10 points

B+ or B: 5 points

C or below: 0 points

BBB complaint resolution:

> 80% resolved satisfactorily: 5 points

50-80% resolved: 2 points

< 50% resolved: 0 points

Permit history:

Clean (few violations): 10 points

Some issues: 5 points

Multiple violations/stop-work orders: 0 points

Inspection pass rate:

> 90% first-attempt pass: 10 points

75-90% pass rate: 5 points

< 75% pass rate: 0 points

Code compliance:

All projects properly permitted: 5 points

Some permit issues: 2 points

Works without permits: 0 points

Online reviews:

4.5+ stars, 50+ reviews: 10 points

4.0-4.4 stars: 5 points

< 4.0 stars: 0 points

Completed project owner feedback:

All owners positive, would buy again: 10 points

Mixed reviews: 5 points

Negative reviews or refused access: 0 points

Warranty service reputation:

Responsive, resolves quickly: 10 points

Slow but eventually resolves: 5 points

Unresponsive or disputes claims: 0 points

85-100 points: Excellent builder, low risk

70-84 points: Good builder, moderate risk

55-69 points: Average builder, proceed with caution

40-54 points: Below average, significant concerns

< 40 points: Poor builder, walk away

If ANY of these present, walk away regardless of score:

Bankruptcy within 5 years

Multiple lawsuits alleging systemic defects

Pattern of permit violations or stop-work orders

BBB rating F or multiple unresolved complaints

Refused to provide completed project references

Multiple owners said "wouldn't buy again"