When Developers & Home Builders Fail

11.28.2007 | 12:06 pm | General

WCI is in financial trouble and Leavitt & Sons files for Chapter 11 bankruptcy protection. All over the United States, national, regional and local developers and builders are experiencing financial troubles and depressing an already weak housing market. And many industry experts believe we are just at the start of this trend.

For most customers the effects really depend on where they are in the purchase process. For those just starting to look for a new home, the effects are negligible, at most they may have to change their minds on where they had hoped to purchase or they may lose out on some financial incentives that may have been pushed by the company. Buyers who have made an initial deposit may lose all or part of their deposit, wait years for their house to be completed while the builder sorts out its financial troubles or for another builder/developer to purchase the project.

Those who have already moved into their homes may find themselves in half finished homes and or communities where all work has stopped. They face questions, such as who handles problems that the inevitably come with new construction, what happens to amenities that were promised, can contractors have put liens on their properties, and who takes care of the management of the community.

While it is by no means an easy task, there are some precautions home buyers can take to avoid falling victim to developers and builders that may be on the brink.

  1. If you are reading about a company that is having financial problems, simply take their communities off of you list of potential homes. While you may be able to find “deals” the problems you will have if they fail outweigh any savings you may think you will have.
  2. Drive by the community a few times each week, not just on Saturday. Warning signs are obvious, if there has been a lot of construction, and all of a sudden it stops – do not buy.
  3. Check with a few of the contractors and ask if they have had any trouble getting paid. Any hesitation in answering your questions could be a sign of trouble.
  4. If people have moved into the community, ask them how work is progressing and if they are having trouble getting their punch lists completed.
  5. Work with a buyers Realtor. By working with a Realtor that represents your interests, it will be much easier for the average home buyer to navigate these waters, and it does not cost the buyer a penny to have their own representation. Be wary of any developer or builder that does not ask if you are working with a Realtor, and remember that the sales staff at any community or development represents the developer/ builders interests – not yours!

In a market like this “caveat emptor” – buyer beware has a special importance.

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FLORIDA TAX REFORM FINALLY MAKES THE JANUARY BALLOT

10.30.2007 | 2:00 pm | General, Property Taxes

The Senate & House finally came to an agreement on the tax relief issue that will be put on the January ballot.

  • Double the homestead exemption, but only for homes valued at more than $75,000 and not for school taxes.
  • Allow owners of homestead property to transfer up to $500,000 in Save Our Homes benefits, including school taxes, to a new home.
  • Impose a 10 percent assessment cap on non-homestead property for the next 10 years. The cap does not apply to school taxes. After 10 years, voters will have the option to restore the 10 percent cap.
  • Allow businesses to exempt $25,000 in taxes paid on computers, office equipment and other personal property.

This will provide some relief to Florida residents, second home owners, and investors, but does not provide any assistance to first time home buyers.

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