I actually got the call a couple of weeks ago... but didn't file it in my brain as a blog topic until today. I was driving back from a meeting (ok, it was really mall walking with my boys) and passed an abandoned townhome project. Sticking out of the ground was the plumbing infrastructure... a bunch of PVC pipes for the drain systems of the un-built townhomes.
We call the PVC Farms...
It is a nice little euphemism. It looks like the PVC is growing wild among the weeds. (admission here. I didn't take a picture there, and shot this one in an actively built home community where there is lot maintenance for the unbuilt properties).
The question was:
I bought a townhome and the builder only completed 20% of the project. The rest of the property has pipes sticking out of the ground... nothing else. Is there anything we, as home-owners, can do about it?
Specifically, she was looking for a legal remedy to force the builder to finish building out the community. The quick answer was... I really doubt it. And we had a nice conversation (ok, she actually screamed at me for a little bit because I wouldn't agree with her) about the various options. She thought the builder was still viable... but I really don't know. We'll assume that he is still around.
- If they were able to successfully bring suit against the builder to finish building the properties, he would likely be forced to CUT PRICES in order to sell them. If he was able to sell the units in the current economy without cutting prices, he would be doing it.
- There is a good chance that he would actually have to cut prices to below his cost... which could very well drive him out of business.
- If he is bankrupted, the warranty on the units he already built (like this young lady) would be pretty useless.
So, the likely outcome of forcing the builder to complete the project would be a devaluing of the completed units... That was what she didn't really want to hear. She told me pretty much flat out that she thought if he completed the other buildings, that he would be able to RAISE PRICES because they should have gone up 10% in the last two years... right? Um... no.
So, what is the alternative?
Hang tight... And sorry, but that doesn't mean that the already finished units are going to have a price uptick either. But, if the builder DOES survive, then he would probably builder there again when the market turns. If the builder fails, the bank will sell the remaining lots... probably to another builder... who would build when the market turns. Of course, if it is a different builder, you don't know WHAT he might choose to build, but it would make sense to build similar units... the plumbing is in, there is a design already there.
Another option would be for a resident or group of residents to buy the remaining lots. They could build them out...
I hated to tell her that she was looking pretty powerless in this situation, but she was. The amenities WERE built out, so that was a mixed blessing (instead of the cost being borne by 100 owners, it was split among 20)... but they were already in, and the cost of building them was complete. That means it could be more attractive to the original builder or another builder to finish the project. The infrastructure is in place... it is paid for... so the cost to complete is less.
If YOU are in the same situation, hang tight. Talk with your neighbors. Perhaps get involved with the Neighborhood Association... there NEEDS to be one in a townhome community to take care of the common areas... and formulate a plan. If your builder is still in business, talk with him. Work WITH everyone involved. In my experience, the builders WANT to build. That is how they make the money. Making YOUR project better to build means that your project may move up the list. BTW, EVERYONE = Builder, neighbors, Neighborhood Association, banks.
Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey.
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