Colorado homeowners, HOA going after bankrupt developer

Homeowners left with flooded back yards, after developer fails to build retaining wall to divert stormwater
By Deborah Goonan, Independent American Communities

Imagine purchasing a brand new home, but, shortly after you move in, the developer declares bankruptcy and walks away before completing your community’s infrastructure.

It happened to homeowners of a Monument, Colorado subdivision. Terry Cummings, HOA Treasurer, and Connie Kreft, both members of Meadows as Monument Lake Homeowners Association, explain how homeowners are now on the hook to pay for expensive projects left unfinished by the developer.

Monument homeowners take housing developer who allegedly walked off the job to Bankruptcy court

Eric Ross, News 5
6:26 pm
October 4, 2018

MONUMENT – A housing developer in Monument dissolved his business and disappeared before finishing the work homeowners say he promised.

While Michael Curry, the owner of Freedom Homes may be out of business, that’s not stopping homeowners from trying to seize his assets in Bankruptcy court.

Terry Cummings and a group of homeowners live along Bel Lago View near Monument Lake Drive. Together, they’ve convinced a judge to push their case against Curry into Bankruptcy court, hoping to recoup some of the money he got paid.

News 5 Investigates learned Curry’s team of attorneys tried countless times to dismiss the matter. Their attempts have been unsuccessful.

As we reported earlier this year, homeowners say Curry skipped town and never put in a retaining wall or fixed drainage issues.

Several homes back up to a steep hill and according to a site plan the Town of Monument approved, Curry’s lack of work puts several homes in danger of flooding.

Read more (video):

The back-story was reported by News 5 in January. Developer Michael Curry of Freedom Homes, stopped all work shortly after selling the last home in the subdivision. He neglected to build a retaining wall — as required by the town’s approved site development plan — into a hillside behind four new homes.

Now, every time it rains, water flows down the hillside and floods back yards, pooling along the rear foundations of homes on Bel Lago View, a cul de sac near Monument Lake Drive.

The video below tells the story:

What makes this case unique is that, instead of suing the developer in civil court, the HOA is taking the matter to federal bankruptcy court. For several months, the HOA attorney, John Randolph Torbet, has filed complaints against Curry, and the developer’s attorneys have attempted to dismiss them. Ultimately, a Judge has allowed the HOA and homeowner claims to stand.

Although Curry filed a Bankruptcy under Chapter 7, it was recently disclosed that in 2016, he earned more than $2.6 million. That’s certainly more than enough to pay the HOA $150,000 to finish the jobs he left undone, including the construction of a retaining wall, plus the HOA’s attorney fees, if the Bankruptcy is converted to a Chapter 13.

Homeowners will have to wait for an October hearing, and final judicial determination, to learn how Curry’s bankruptcy will proceed, and whether or not the HOA and individual homeowners will be able to recover part or all of their financial losses. (Either way, attorneys and the bankruptcy Trustee will be paid before any creditors.)

Whether or not homeowners will succeed in their attempt to force the developer to pay for their promised retaining wall, plus other HOA or homeowner claims, remains to be seen.

News 5 recommends that homebuyers try to check a home builder’s or developer’s references before making a purchase agreement. And that’s great advice.

The challenge is that, many times, a builder or developer can abruptly dissolve a business venture, then open a new business in another state, simply by filing some corporate forms under a different name.  Sometimes it can be very difficult for a home buying consumer or existing homeowner to evaluate the credentials and solvency of the business corporation that’s selling new homes.

Experts also suggest delaying the closing on a home purchase until construction of the home and community infrastructure is 100% complete. That’s also good advice, when unfinished work is obvious to the home buyer. Sometimes, however, a home buyer is unaware of unfinished construction of less visible, but essential, portions of community infrastructure. For example, a home buyer may mistake a temporary paved road for a more permanent road surface, and may be unaware of the absence of below-ground stormwater management infrastructure to ensure good drainage.

Unfortunately, a housing consumer cannot simply count on the promises of a developer or home builder.  The only way to know what the developer is obligated to build, as illustrated by the above example, is to check official land records with the appropriate permitting authorities — generally either the city or county. A home buyer is wise to hire a real estate attorney to review not only purchase and construction contracts, but also to research land records, as well as covenants and restrictions that will limit the property rights of homeowners, and/or create future financial obligations to the HOA.

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