Expert: liznarr - 2/12/2010

Question
My husband and I purchased a new home in a fairly new subdivision in August 2008.  We had two pre-teen daughters at the time and only looked at homes in subdivisions with swimming pools.  When we found the home we eventually purchased, the developer's realtor (stationed in a model home) told us the pool was under construction (which was obvious), and they could have had it completed that year but would only be able to open it for a week or so at the end of the season.  Due to the cost, they wouldn't be doing that; however, it would "definitely" be open the following summer.  The subdivision website also said "pool opening summer 2008".

Early Summer 2009 - The website said "pool opening summer 2009".  Although the poolhouse and pool appear to be close to complete, work has stopped, and the developer tells one or two residents he can only open the pool if we triple our HOA dues - from $350 to $1050.  Obviously, we declined that "offer", so the pool did not open.  The realtors were then telling new prospective buyers that "the homeowners decided not to open the pool."

We have now met with the developer and the realtor.  The realtor tells me she "never meant to mislead", but the only way the pool could have been opened was to have a neighboring subdivision also join in.  Although not ideal, we would accept this as a possible temporary option to get the pool open.  However, she admits they have never been approached, even though she had told me the pool would "definitely" be open.  

We currently have about 32 homes.  Some neighbors have a letter from the developer from two years ago stating he could open it when we there were 40 homes.  Now the developer still has not finished the pool and says he cannot open it until we have 70+ homes in the subdivision.  He won't put any money into the operation of the pool, yet there are 4-5 spec homes now going up.

At this point, we and our neighbors don't know what to do next.  We were all given misleading information that got us to buy homes in a neighborhood described as "aresidential neighborhood possessing features of more than ordinary value to the said community."  We also paid more for our homes and lots due to that perceived value.  

What is our recourse?  Other than taking time to write to the board of realtors, state attorney general, etc., we don't want to pay a lot of $$$ for an attorney, especially if it won't get us anywhere.  In the meantime, we have an empty unfinished pool at the entrance to the subdivision, and spring is around the corner.

Answer
Hi “T,”

Writing the Board of Realtors has no real TEETH for a scoundrel like this developer and his agent(s), so my feeling is that you have not lost anything there.  All the Board of Realtors could do is fine the agent and/or suspend/revoke her membership.  Since she appears to not be operating under our Realtor rules at the current time, I don’t see any hope of her improving her behavior; so any action by a Realtor Board against her probably would not affect her even minutely.  As an aside, the Board of Realtors has no jurisdiction over the developer, unless he is separately licensed as a real estate agent and pays Realtor dues.

I’m not trying to skirt any of your questions, but you and the other homeowners in this subdivision should consider getting together and pooling your money for a GOOD trial attorney (not a paper-pusher) and go after this developer.  I know none of you want to have to “spend good money after bad,” but you need some serious legal help.  

Before spending any considerable amount with anyone, however, I would first investigate the developer and see if he has any assets to go after.  A good abstractor can help you with this to see what property is publicly recorded in his or his company’s name.  You can even do some of this yourself by going to the Clerk’s office at the county where the subdivision is located.  There are employees there who can help you locate and document this information.  You should also check to see if the developer is bonded and/or carries any liability or other insurance that would cover your situation.  Ditto for the developer’s agent(s) and their Broker-in-Charge.  

If the developer is licensed in your state as a builder, I would contact the Residential Builders’ Licensing Commission (or whatever it is called in your state) and see if you and all the other affected homeowners can file complaints against him.  In my state, if a licensed builder is investigated and ordered to do, or not do, something by the Licensing Division for Residential Builders, and the builder refuses, his/her license can be suspended or revoked.  By going after this developer’s license (again, “if” he is a LICENSED builder), possibly you all could stop him in his tracks.  If he cannot build and sell any more homes, there goes his livelihood.  When you go after the wallet, you usually get results.    

Most developers/builders who screw over people are judgment-proof, and they could care less.  I’m sorry to have to make a comment like that, but that is the reality of your situation…but if he’s licensed as a builder and is also building the homes in your subdivision, you can possibly accomplish your goal.  If there is a model home and others under construction, it would appear (again, if they are owned by the developer) that there is some equity there which you and other homeowners can go after.

As far as the worthless Realtor in this situation, you and all the other homeowners might consider contacting your State Real Estate Commission and filing a formal complaint against both her and her Broker-in-Charge.  The purpose of the Real Estate Commission is to PROTECT THE PUBLIC.  This Realtor has not protected you all, but duped you, and yet continues to operate.  I would go after her license.  If you have not yet contacted her Broker-in-Charge (BIC), he/she needs to be noticed, also.  A BIC is responsible and liable for all actions of all agents working under him/her.  If you retain an attorney, let the attorney suggest the order in which different actions need to be taken.

Your writing that this Realtor commented ‘she did not intend to mislead you’ is simply lip service.  The fact remains that she DID mislead you.  If you can prove she INTENTIONALLY misled you, that equates to FRAUD; and there are severe consequences for fraud.

Get all your documentation together for an attorney and/or licensing board -- letters from the developer to some of the homeowners regarding the pool opening when 40 homes were completed (then changing the number to 70); screen shots of the web page stating that the pool would be open in the summer of 2009, photos of the unfinished pool, and so on.  Any flyers you have with statements/representations printed on them should also be included in your file, and any MLS printouts with misleading information.

Good luck to you all.  I hope some or all of the above is helpful and that you will take immediate action to stop both this developer and his agent from continuing to operate.  Stories like yours make my blood boil.

I would be interested in hearing your progress later if you don’t mind letting me know.  If you have additional questions, please feel free to write again.

Regards,
Elizabeth