Purchased in a new townhome community (130 - 150K range) where the builder/developer marketed the subdivision with a clubhouse & additional parking in what as to be a common area.

Instead the builder/developer built & sold 3 more townhomes on that land. The buyers (inexperienced 1st timers) of those units closed on their property using a law firm associated with the builder.

Well tax time comes and the buyers send in their payment only to get a letter from the government saying that they are attempting to pay taxes on land not deeded to them. :eek: The land is still deeded to our home owners associated. The only way to get the deed transfered is for 80% of the owners to sign a document okaying this action. These poor buyers can't sell and the builder won't by back the homes.

Needless to say most owners, while sympathetic to the plight of these owners - are unwilling to sign. The builder left the community without granting any additional reserve money (not illegal but very unusal for our area). There seems to be shoddy worksmanship with constant watermains breaks. The builder created small retention ponds that didn't meet code, resized them and left dangerous/eroding craters at the back of quite a few homes without fencing or anything. The community center, parking and other amenities were not created as promised. The HOA is hoping to use this deed situation as leverage to get some cooperation from the builder in resolving some of these issues.

We're seeking legal advice but what are your thoughts. We're looking to contact the State Attorney General and local television news. There's been a focus lately in Charlotte on unethical business practices of new home builders and mortgage lenders with first time home buyers - particularly with property under the $200K price range. The foreclosure rate in the city has skyrocketed.

Any advise?

Sounds like the builder really made a mess of things. I'd definately pursue the routes you have already taken, and contact a lawyer. I would really expect that the builder would legally have to return the money because he/she has not legally sold the property to them. ie. the builder can't legally sell property they don't have a deed to. Unfortunately it may take court action to get anything done about it. It's possible there could even be criminal charges filed against the builder (fraud or something similar for leading the buyer to believe they owned the property, accepting money for it and not delivering the deed). If the law firm that handled the sale knew anything about it, they may get in hot water as well. Contact the attorney general.

Did the buyer pay cash or get a loan for the property? In either case, this problem should has shown up if a title search was done (most banks here do one for a loan). It should have shown up then that the seller (builder) didn't own the property and that should have stopped the sale. If one was done and this didn't get caught, the buyer may be able to go against the title insurance seeing as they obviously don't have clear title to the property.

As far as the rest of the community, were these promises in writing? If not, it may be difficult to pursue that issue, though they likely can pursue the builder for damages to fix the existing problems.

I wouldn't count on the deed issue being any leverage. The builder holds all the money already so what is in it for him to fix anything. In fact, if these are typical practices by this builder, I can just see him/her going bankrupt to skip out on everyting. Any criminal charges may be your biggest leverage, that they would apply even if the community released the property they thought they purchased to them. (ie. you can still be charged for a crime even if someone else returns what was stolen).

It sounds like the building permit/inspection process needs a major overhaul in your town. It shoudln't have taken much for the person processing the permit and/or building inspector to notice the structure was not being built on property owned by the builder. And if problems with bad work are common, they should require a bond, that could take care of problems when the builder skips town (plus disreputable builders likely wouldn't be able to secure a bond in the first place)


-Tim

Thank you for your response and advise. I am in Charlotte, NC. The builder is national organization along the lines of Ryland or KB Homes but seemingly more reputable - or so I thought.

I believe the buyers got a loan for their properties sold to them by the developer. The builder developed this area and then transfered the community over to the HOA in a phased approach. They got greedy in the final phase of developlent and basically tried to squeeze in a few more units on land they advertised would be used for common areas.

I figured there wouldn't be any recourse to get them to provide the amenitites they promised. But I'm not sure why the community should have to agree to transfer the deeds to these homes. Those units can't be sold either because they don't own it. Its a mess.

Your right, the community has no obligation to transfer the deed to these buyers. They community apparently owns the property free and clear and I suppose they could even evict the buyers if they really wanted to. Each of you (the buyer and the community) have separate issues with the builder. It's a big mess.

The buyers need to also contact the bank then, and ask if the bank has secured the deed for the loan (typically the bank would hold the deed). There is a remote chance that some paperwork has not yet been filed and the bank is holding a new (legal) deed that simply hasn't been filed yet. (I've seen it happen a lot in forclosures where the bank is selling the property that the court house still has listed as being owned by the old property owner, simply because the bank hasn't yet bothered to file the paperwork). The bank may be terribly interested in the fact they issued a loan on a property with no clear title. They may be able to lean on the title insurance (if any) and the builder as well.

-Tim