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MONEY

Cape Coral builder leaves homes unfinished

DICK HOGAN
DHOGAN@NEWS-PRESS.COM
The pool at Community Homes LLC’s model home on Chiquita Boulevard in Cape Coral was a bright green Thursday. The model home was closed.

Community Homes LLC, a custom home builder in Cape Coral, has run into trouble – leaving the city with partially completed houses whose owners are getting tagged with liens by unpaid subcontractors.

"We have suspended his permit-pulling privileges at this point," city spokeswoman Connie Barron said. "He has about a dozen permits that have to have some work completed, and we need to have some proof that his financial condition has stabilized."

Lee County spokesman Tim Engstrom said Community hasn't lost its privileges in the county. The company had only a house and a pool permitted in the unincorporated county last year and which it completed in May, he said.

The situation is deja vu to the early 2000s when builders often overextended their finances in trying to keep up with the growth boom.

Phone calls Thursday and Friday to Community Homes got only an automated "mailbox full" statement, and the company's model home at 3114 Chiquita Blvd. S. was closed — its swimming pool a bright algae green.

Owner Doug Laskowitz didn't return messages left on his cellphone Thursday and Friday.

Many of Community's customers are German or Swiss, most of whom did not use a bank to finance their purchases, said Darrin Schutt, a Cape-based attorney who's representing some of the people with unfinished houses.

"Most of them don't," he said. "I guess it's just difficult. There are only a few that will lend to foreign nationals. Being a foreigner just puts you further down the ladder of acceptable risk."

A bank typically keeps an eye on how the work is progressing, and would require a builder show proof one phase of construction is finished before releasing money for the next one.

Some of the buyers are new to the real estate industry, Schutt said. "A lot of them come over on vacation and they come over and see the opportunity to do it themselves."

Online Lee County Clerk of Court records show at least eight of the owners are saddled with recently filed liens by subcontractors.

Lee Building Industry Association president Victor DuPont wasn't familiar with Community's plight but said that generally builders get in trouble when they try to use money paid by recent customers to help pay off older jobs on which the builder lost money.

"You kind of get ahead of yourself," said duPont, who's president of duPont Builders in Fort Myers.

"Our business is a cash-flow business, obviously," he said. "What I've seen happen is basically the old thing of robbing Peter to pay Paul, and eventually when there's no more Peter to pay Paul, that's it."

Contractors have to build more houses to keep up, and eventually run out of money, duPont said.

Kirkwood Electric filed six liens totaling $90,074.40 in May and June against Community customers for work not paid for, according to clerk of court records.

Wayne Kirkwood of Kirkwood Electric said the customers and Community are current on their accounts.

But subcontractors need to keep their eyes open for signs a builder's in distress, he said.

"The phrase I've coined is 'symptoms of a cold,' he said. "Excuses rather than reasons. Somebody paying slowly who wasn't paying slowly before."

It was much more common for builders to collapse during the boom years when there was a lot of money to be made, Kirkwood said. "I think we didn't see a lot of them for 10 years because nobody had any jobs."

Failures

A Community Homes house sits partly finished on SW 10th Avenue in Cape Coral.

The most spectacular of the failures was Starlight Homes, which ran into financial problems in 2003 and stopped work on the 66 homes it had under construction. Dozens of homeowners and subcontractors were left in the lurch.

Starlight went into bankruptcy Oct. 17, 2003, and in 2005 owner Mike Molloy had his license revoked by the state Construction Industry Licensing Board.

At that time he owed $538,418.12 in restitution to customers, according to licensing board records.

For homeowners left holding the bag, options remain limited.

Subcontractors who aren't paid by the general contractor can put a lien on the homeowner's property even if the homeowner paid the general contractor, said Fort Myers-based attorney Michael Hagen.

People dealing directly with the builder should take common-sense precautions, Hagen said: "Don't give all your money on the front end to the builder, and do regular inspections to make sure the work is progressing. This is really important for out-of-state and even more important for out-of-country buyers."

When things go wrong, "The owners may be stuck," he said. "They may be stuck paying twice."

Connect with this reporter: @DickHogan (Twitter) or email dhogan@news-press.com

How to file a claim

Here are rules for homeowners who want to file for reparations from a state fund:

•THE FUND: The Florida Homeowners' Construction Recovery Fund provides for payments of up to $50,000 for claims filed after Jan. 1, 2005, by homeowners wronged by a licensed contractor who has committed offenses such as abandoning a construction site for more than 90 days or signed a false statement claiming that all payments to subcontractors have been made.

•THE RULES: To collect, a homeowner must have a signed written contract and a final judgment or order of restitution, according to an information sheet put together by the state Department of Business and Professional Regulation.

•PAYMENT: The fund doesn't pay post-judgment interest, punitive damages or attorney fees, just actual or compensatory damages that haven't been collected.

SOURCE: Florida Department of Business and Professional Regulation