What is the name of your state? Ohio
Our house was completed June 2006. We have cement block walls in our basement with mostly verticle, but some horizontal, cracks thru the cement blocks, some cracking runs from floor to ceiling. Called builder in October 2006 regarding the cracking and his repair person said "cracking is normal" and commented the cracking was in the grout lines (not at all true). We had a structural engineer evaluate who thought the cracking may be from backfilling with the heavy clay soil in our area and not using sufficient stone which he said should have been backfilled to within 18 inches from soil line. We have about 1 foot of stone over drain tile per the plans. Engineers advice was to watch the cracking over the winter for extending. It doesn't appear the cracks have widened.
A few weeks ago after a thaw the largest crack had water coming thru the lower 1/2 of the wall and onto the basement floor. All 4 walls have water marks about 4 feet from the top of the wall. Builder's rep came out this morning to view. He told us it is a grade problem, although the grade is what they did and told us not to adjust. There is a good grade away from the house all around. He is telling us to pull back the soil, tar up higher on the exterior foundation wall and raise the grade ourselves. He said they (the contractor) couldn't tar any higher due to city code. (And we can??)
As far as the large crack which has the worst leak, the contractor will dig on the exterior and put more tar on the crack. We have only tar all around the exterior of the basement. I specifically recall the builder telling us he has not had problems with this method and actually had a customer with water problems who paid for a more extensive waterproofing system. We told him we wanted to be sure to have a dry basement as we planned to finish it. It certainly cannot be finished with all this wettness now.
We've had numerous other quality issues with the builder but this by far has the largest structural and resale impact on the house. There is an arbitration clause in our contract. Any and all advice is greatly appreciated. We are in the process of looking for an attorney to help guide us. Historically this builder has always blown us off and always tells us the issues we present are "to be expected", or are "normal". We've spent an unreasonable amount of money on an engineer, new home inspection, plumber, repairs, etc. Now an attorney. Any thoughts? Thanx.

What is the name of your state?