Chinese Drywall

By JAMES R. HAGERTY
Lennar Corp. has identified about 400 homes in Florida that have confirmed problems with defective Chinese drywall and has set aside $39.8 million to repair the homes, the Miami-based home builder said in a securities filing Friday.

The figures are as of May 31, Lennar said.

Complaints about odors and corrosion blamed on defective drywall have been increasing for months. The U.S. Consumer Product Safety Commission, or CSPC, said in a letter to four U.S. Senators earlier this week that it has received more than 600 complaints relating to this drywall issue from 21 states and the District of Columbia. Most of the reports are from Florida, Louisiana and Virginia.

Lennar and some other builders have been forced to gut homes, mostly built in 2006 and 2007, to replace drywall, wiring and other fixtures.

Lennar said that it hasn’t yet found defective Chinese drywall in homes it built outside of Florida and that it isn’t yet able to “reasonably estimate its future exposure” to the problem, which has led to a spate of lawsuits against drywall suppliers and builders.

The builder said it has a $20.7 million receivable for covered damages under its insurance policies. Lennar said it is seeking reimbursement from subcontractors, insurers and others for costs the company expects to face in investigating the problems and repairing damaged homes.

Drywall, also known as wallboard, is made from gypsum coated with paper and is used in walls and ceilings.

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