Looks like he screwed up the retaining wall.

I would not call that a retaining wall, more like a decorative curb. A retaining wall should be deep enough to prevent “erosion”.

It looks like some weep holes, if you want to call them that, are located high up on the wall, where it is easier for a stream of running surface water to "find" and access them. Once this happens, a stream of running water can quickly carry soil or sand away. I would plug the back side of these high up holes with glob mortar so running water can't get through. Instead of filling below the grass with sand, I'd fill with topsoil because the grass will like it better. I don't know why he'd be using sand there. Eventually, as high up holes in the block are exposed and filled, there will be an end to them.

IMO this is not a retaining wall and I honestly can’t get a feel for what was the issue .A real retaining wall needs to have a way to move water awy to keep the wall from collapsing we have quite a tall one but it was made to keep the dirt from the hill sliding down on the deck so lots of different levels of gravel , big” o" placed to divert the water and it has worked perfectly for 12 yrs.Your wall needed to higher for sure to control the erosion IMO.

This may give a better idea of the height of the wall.

I don't think we know enough to say the wall is a dud. We have to rely on the owner's description and it may not be complete, as if often the case in this forum. It looks like he's having only one small problem that can easily be dealt with, even if it repeats somewhere else.

Thank you for your feedback and advice. Our builder has contacted the landscaper that installed the wall and their latest “fix” is to pull back the sod in the problems areas only, pack with clay to help “clot,” cover with a netting, and resold. Their hope is that this, along with burying the downspout pipes to the side yard, will fix the problem. Our one year warranty on the home expires in July and we are quite concerned this will be a reoccurring problem. Any other suggestions? Would you recommend having a separate landscaper assess? Thanks in advance!

"... pack with clay to help “clot," That would be poor man's mortar. :-) It might be enough to work.

Do you live where you're likely to have Spring rains? They'll be useful to test the durability of the fix. I would use mortar right off the bat, but if they won't, the clay may work. I don't get the point of it though. It seems like more trouble with a greater possibility of coming unplugged. Whereas mortar just won't. If you can get through some hard Spring rains and the sod well rooted, I think you will be OK. Need some rain.

Was that wall specifically part of your city’s inspection? Who owns the wetlands? What type of hoops did you have to go through to build that close to wetlands?

Wetlands are pretty tightly regulated. If you’re having soil erode into them, someone isn’t going to be so happy about that. Find out who that someone is, and raise the issue with them. Ask your city for clarification about what permits and inspections are needed in order to have a retaining wall next to wetlands. As the soils engineer about the grading and discharge of runoff being compliant with subdivision plans.