Company: DREM
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004861
Chunk: 97

Company: Dream Homes & Development Corp.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 97
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builders in
the future. Environmental regulations can also have an adverse impact on the availability and price of certain raw materials such as
lumber.

We
may be subject to significant potential liabilities because of construction defect, product liability, and warranty claims made against
us.

As
a homebuilder, we have been, and continue to be, subject to construction defect, product liability, and home warranty claims, including
moisture intrusion and related mold claims, arising in the ordinary course of business. These claims are common to the homebuilding industry
and can be costly.

9

With
respect to certain general liability exposures, including construction defect, moisture intrusion and related mold claims and product
liability, interpretation of underlying current and future trends, assessment of claims and the related liability and reserve estimation
process is highly judgmental due to the complex nature of these exposures, with each exposure exhibiting unique circumstances. Furthermore,
once claims are asserted for construction defects, it is difficult to determine the extent to which the assertion of these claims will
expand geographically. Although we have obtained insurance for construction defect claims, such policies may not be available or adequate
to cover any liability for damages, the cost of repairs, and/or the expense of litigation surrounding current claims, and future claims
may arise out of uninsurable events or circumstances not covered by insurance and not subject to effective indemnification agreements
with our subcontractors.

Our
operating expenses could increase if we are required to pay higher insurance premiums or litigation costs for claims involving construction
defect and product liability claims, which could cause our net income to decline.

The
costs of insuring against construction defect and product liability claims are high, and the amount and scope of coverage offered by
insurance companies is currently limited. This coverage may be further restricted and may become more costly.

Increasingly
in recent years, lawsuits (including class action lawsuits) have been filed against builders, asserting claims of personal injury and
property damage caused by the presence of mold in residential dwellings. Our insurance may not cover all of the claims, including personal
injury claims, arising from the presence of mold, or such coverage may become prohibitively expensive. If we are not able to obtain adequate
insurance against these claims, we may experience losses that could reduce our net income and restrict our cash flow available to service
debt.

Historically,
builders have recovered from subcontractors and their insurance carriers a significant portion of the construction defect liabilities
and costs of defense that the builders have incurred. Insurance