Builder Going Bankruptcy? (Orlando, Fort Lauderdale, Hollywood: credit, appraiser, insurance)

[oldstarfish]

The builder currently in the process of building our new home at Ovideo(estimated closing 5/2008) is considering filing CH11 bankruptcy. Guess ours is not the only one who's planning on this. Many people, like me, are gonna face this rough situation - possiblly: no refunding on deposit, no moving forward with the lot, no warranty, no community landscape.....

Please refer to the following websites for information regarding what can possiblly happen to the existing customers (residents). Hope everything ends up nice and sound.

Homebuilder: active adult communities, all ages new homes, townhomes: Florida, Georgia, South Carolina – Levitt and Sons
Homebuilder: active adult communities, all ages new homes, townhomes: Florida, Georgia, South Carolina – Levitt and Sons

[rholborn]

Homebuilder TOUSA Inc. of Hollywood says it may not survive the housing slump. The company's announcement comes less than a week after Fort Lauderdale-based Levitt and Sons filed for Chapter 11 bankruptcy protection from its creditors.

Read the full story:

FAR - News & Events - Hollywood-based builder TOUSA faces bankruptcy


It appears Engle Homes may be filing Chapter 11, we all need to be aware of the situation in order to protect ourselves. And if you are considering writing an offer with any builder right now, negotiate to have the deposit held in escrow with the Title Company. Most builders put that escrow right in their operating account and it is fully disclosed in the contract. But if they go belly up, that down payment is gone if in the operating account.

[hanawar1]

My situation:

Gave deposit on Engle spec home in Live Oaks Reserve...80% done...to be completed end of December
Signed purchase agreement
Deposit has not been cashed yet
Neighborhood has only one more street of empty lots...from what I know

Any advice? Can I stop payment or get out of contract? I know I probably need legal advice...but thought I'd try the experts here first!

[oldstarfish]

I just called the sales rep. I've been told that Engle is still strong at least in Orlanod area, and they're gonna stay - continue selling, building, and serving as usual. They blamed the media for exagerating everything, though re-orgnization (this is the word they prefer to CH11 bankruptcy - a game of word) is a possibility. The sales also told me that several of their top management people have just bought houses in Live Oak - which should be a sign of assurance.

Anyway, for the peace of mind, I transfer my deposit to the escrow account. I can still have my money back if something happens.

[hanawar1]

Thanks oldstar. How did you go about doing the escrow account...they played nicely?

I am not sure about the media spin...the Ch 11 possibility is a direct quote from their top dog. I still can't help but be a bit skeptical...not sure what else they would tell you. As a matter of fact...could even be a script at this point.

Anyways...hope this all blows over and we can be neighbors!

[KMFlyguy]

Folks, I just got done moving our deposit with Engle from them into an Escrow account. Just ask for the Escrow Addendum Form. You fill it our, sign it, and they transfer your deposit.

Now, as per section 18 of the sales contract, they will try to charge you 2% of your deposit at closing for escrow costs. I contacted the VP of sales at Engle, and got ALL Escrow costs waved. He didn't even argue over it. For us that was $600 saved. Now our deposit is safe. I also requested a letter at closing stating that there are no liens against the land or any materials used to build our house.

Hope that helps... we were also told that the Orlando office is doing alright. They mentioned it was media hype. Hmm... hope so! At least our deposit is safe.

[hanawar1]

Spoke to them today as well...told me the same thing. I guess she (Ramona) made me feel a little better about the situation?? Oh well...nothing more to do I guess than talk to my new neighbors! It will be my wife, me, and our 16 month old boy Chase moving down in December. Right now I am commuting from Columbus...can't wait to get settled!

[oldstarfish]

KMFlyguy - Good to know that you are safe too. Thank you for the tip about the escrow cost. They did not mention that 2% thing to me (and i could not find it in sec 18 either). I'll have to talk to them again next week to make sure I won't be charged. What's more important, I'll have to call to make sure that our money REALLY has ALREADY been transferred.

Hanawar1 - Hope you've already sent the request for the transfer. All we can do after that is "let it be". My closing date is next May/June and my house is a 2008 new design, which has never been built before. Guess my situation is more shaky here. I talked to an appraiser who works in Seminole county. He said Live Oak is still selling very strong compared to other communities nearby and they should be able to finish the last phase.
BTW, I lived in State College, PA, which is 200 miles away from Philly, for the last 7 years.

[KMFlyguy]

Oldstarfish, Section 18 only lays down the rules for them charging the Escrow fee. The actual fee was in an escrow addendum at the back of our paperwork. Section 18 says you will pay for an insurance bond on the "Surety" bond Engle has to get to cover your deposit. The additional paperwork states the cost of that bond. Ours was 2% of the deposit.

Hanawar, commuting from Columbus is not fun. I work for an airline and understand all too well what it is like to commute. Don't worry, it will be better soon! Besides... we have anumber of non-stops top CMH. Maybe I will see you on my plane. LOL!

[hanawar1]

Oldstarfish - I am very familiar with State College as many of my friends attended PSU. I have been there several times for football games, etc. I went to Pitt so...another reason to be familiar with them!

I feel like the initial shock is wearing off a bit...and my wife and I are back to new-house planning. While they still can't give me a "go date", I still expect to close late December. I'll be flying back to Orlando on Monday, and plan to do a drive-by to see how the neighborhood is coming along.

Happy T-giving to you and your families!