Published: Monday, April 21, 2008 at 6:01 a.m.
Six months ago, the lots in Weschester, a subdivision in northwest Gainesville, were flying off the market. Today the first wave of homeowners is beginning to wonder when the vacant lot next door will see development.
And further signs of troubling times have come as residents watch liens pile up against one of the homebuilders in the subdivision.
Brett Frye moved into his new house in Weschester in January, and was shocked to discover that a company providing building supplies to his homebuilder is seeking $3,742 in unpaid bills.
"As far as I am concerned absolutely no one has contacted me," said Frye. "I'm absolutely unaware of any liens that have been placed on my house."
Frye is one of many homeowners across the nation who have purchased or constructed new homes and now could face paying thousands of dollars to subcontractors for work they have already paid through the general contractor.
As the economy has slowed and some homebuilders have become overextended and short on cash, they have fallen behind in payments for construction - at least four major companies in the national home building market have filed for bankruptcy.
Local homebuilders say Gainesville has been shielded from that crash of inventory by not having any nationwide builders in town.
And in Weschester, one of the two homebuilders in the neighborhood on NW 43rd Street says it is financially sound and looking to the future of a great community. The other homebuilder, Watson Custom Home Builders in Jacksonville, said it is facing financial trouble.
More than 75 liens, totaling approximately $350,000 have been filed on the company's properties and homes in Alachua County.
The liens are for services including surveying, landscaping, cabinets and construction supplies that have not been paid for by the general contractor Watson.
If Watson is unable to pay off the subcontractors within a year of when the liens were filed, Florida lien laws could make it difficult for home buyers with open contracts to close on completed houses and buyers whose houses don't get completed could lose their deposits.
"That's what (president and owner) Jim Watson is really working very, very hard to do, get all of those pieces together, so we can close on these houses and finish the ones that are under construction," said Elizabeth Towers, an associate with Watson. Towers said the priority right now are houses that have been sold and moved into, but now have subcontractors seeking payment for work they did on the property through liens.
Liens prevent property from being sold, and in at least two cases in Weschester, liens have been filed on houses that have already been purchased and moved into.
In those cases, according to Florida's Construction Lien Law, if the liens don't get paid the home could be sold against the owner's will to pay for the labor, materials or other services the contractor didn't pay.
Watson is building homes in 31 subdivisions in Duval, Nassau, Baker, Clay, St. Johns and Flagler counties in Florida and Camden and Glenn counties in Georgia. Weschester is the company's only subdivision in Alachua County.
An online public records search showed the builder has had 232 liens filed since February 2008 in Duval County, 150 liens in Nassau County, 15 liens in Baker County, one lien in Clay County, 135 liens in St. Johns County and there were no liens in Flagler County.
Towers said that the company has drastically reduced staff and is seeking loans and financing.
"We are experiencing challenges and we're working from sunup to sundown," Towers said, pointing out that people are taking on different roles to get things done.
Henry Rabell, a sales representative for Bosshardt Realty who has been selling homes in Weschester, said that Watson has 35 homes under contract and 25 homes completed and occupied. Rabell said prices have been reduced and that homes are selling for about $136 per square foot.
"My concern first was what (the slowdown) would do to the overall value of the neighborhood," said Aaron Weldon, who closed on a house in Weschester last November. "Another concern we have is that Weschester is supposed to have a clubhouse and facilities for homeowners to use... We're hoping that is still in the works at some point."
Watson Custom Home Builders is responsible for about half of the 200 lots in Weschester, and Intervest Construction, Inc. (ICI Homes) is building on the other half.
Karen Sutherland, vice president of ICI Homes North Florida division, said she is aware that Watson is having problems. "They just got caught in a crunch and, unfortunately, they certainly aren't the only one and certainly won't be the last," Sutherland said. "They got to a point where they have too much inventory."
"We're still there, and we're still selling. We think it's a great community and an upcoming location," she said.
Michael Sechrest, a Gainesville construction attorney with Fisher, Butts, Sechrest & Warner, said homeowners in a situation like this could find themselves paying twice for work done on their houses - once to the general contractor or home builder and a second time to the subcontractor filing a lien.
Sechrest said the onus of responsibility often falls on the customer or home buyer to protect themselves from liens.
The customer must file something called a "release of lien," which is a written statement that protects a home buyer's property from liens.
Sechrest said lien releases must be filed prior to paying the contractor, when the homeowner is notified a subcontractor is doing work on their house through a "notice to owner."
A notice to owner is a document from a subcontractor notifying an owner that the subcontractor is beginning work on their property. It is required by Florida law within 45 days of the start of services or delivery of materials.
"If they ignore the notice or don't make a proper payment, they could pay a contractor for work and then later on have to pay the subcontractor," Sechrest said.
"Most people think the builder is responsible for the subcontractor lien releases, and most builders do provide that as an administrative act to assist the owner," he said. Sechrest added that it is important for the owner to have those releases "in hand" before each payment to the contractor for a period of work.
If the consumer is buying a pre-built house from the contractor or developer, the owner should require an affidavit - a statement under oath - from the builder that there are no outstanding payments that could lead to liens.
Sechrest said that while Florida law leaves room for abuse by a general contractor, his experience has shown that contractors are honorable, and lien situations typically come about as a result of cash-flow problems in a slow economy, not nefarious intentions.
"My heart really lies with these contractors who are going out of business," Sechrest said. "Homeowners will get their equity back, but contractors very rarely get their businesses back."
Gainesville home builder Adam Bolton, president of Robinshore Inc., said that although his company has seen a slowdown, healthy companies weather the difficult times.
"A lot of the state is suffering some corrections in the marketplace," Bolton said. "Especially with pre-sold contract homes."
"Before you contract with any builder, you should do your research and make sure they are a financially sound company," he said.
And as for Weschester, the homebuilders are asking for patience as more sales are made.
"The bright news is, Bosshardt is here, and we're continuing to represent the homeowners who have bought here," said Rabell, adding that it's a great time to buy with builders dropping prices so they can sell excess inventory.
"I think this signals the bottom of the market, in my opinion, when you've got a builder capitulating" on home prices, said Rabell.