Mercedes Homes to honor warranties
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The Bankruptcy Court has authorized Mercedes Homes to continue to honor obligations related to Customer Programs, including home warranties.
The builder now has authorization to honor home warranties, but it is not obligated to do so. There is a limitation to this authorization – Mercedes Homes cannot spend more than 1% of a home’s final sale price on warranty claims.
Earlier, the Court had granted an interim order permitting Mercedes Homes to use cash (which is collateral of both 1st lien and 2nd lien lenders) according to submitted budget through March 2, 2009.
This indicates a lower risk of liquidation, if the Court has decided that Mercedes Homes has the resources to honor warranties, and use its cash collateral.
Using our Crash Predictor Model, we estimate the likelihood of the following scenarios:
You left out part of the court ruling. It says 1% of final sale price but are NOT required to honor warranty. As one who has owned a Mercedes Home since August 29, 2008 I can tell you, they have not and do not honor warranties.
Once only have I seen this link posted by Mercedes Homes, a statement about a CLEAR title for a home at closing. I closed on my home August 29, 2008. However, I was just served with today with a certified letter, inside was a lien by “Garage Door Services” Lockhart, Texas who placed a lien my home in Fort Bend County, Febuary 13, 2009. So much for Mercedes providing a CLEAR title. How is it possibe to have a lien placed on your home 6 months after you closed? This should be fraud!!
Read what Mercedes Homes posted - The FAQs answer all of the questions, rumors, and myths of this discussion.
Q: How do I know that I will have a clear title for my home at closing?
A: B~D~R Title, although a subsidiary of Mercedes Homes, is not included in the reorganization filing. Prior to closing, B~D~R Title will clear the title for your new home and will make sure that all liens or claims are cleared before closing, in order for the title to legally be passed between one party and another.
My apologies that we didn’t make it clear that the builder is not required to honor the warranties. It is typical, across the board, that bankrupt builders would ask for court authorization to do honor certain obligations (including warranty claims) and leave the door open such that they have sole discretion as to whether they would actually do so.
Sorry to hear about the lien on your home. We have heard from many people facing the same problem and you really need to find out more about the details of the lien and get legal advice.
Adria, I most do plan on getting legal advice. However, in the State of Texas with TRCC in place, that is probably a total waste of money!
I noticed this statement on your home page “…After all, you are their customer, and they want more customers. More often than not, it’s the bank”.
That is not true of Mercedes Homes either. They use their own mtg company MHI which they included in their bankruptcy filing. Also isn’t it true, that most home builders have banks in place to steer buyers toward?
Now I realize there are those who will take offense at the word “steer” but it’s true. Unless you come in to purchase a new home with your financing already in place, they (builder) do it for you. And of course, they (builder) is always a little extra if you use their lendors.
I wasn’t referring to the bank for home buyers, but rather the bank which loaned money to the home builder. In many cases, these banks are secured over all assets and they dictate how bankruptcy proceedings work. They can object to home builder continuing with sales incentives programs, object to home builders honoring warranties, and claim funds in the builder’s bank accounts as their collateral.
To illustrate, take a look at our post - What Happens to Warranties if the Builder Files for Bankruptcy. Legend Homes requested authorization to honor pre-petition warranties. But Columbia River Bank objected, saying that the builder “asserts without support that a failure to satisfy prepetition obligations to customers who have already purchased a home will jeopardize customer loyalty and trust as well as generate negative publicity for Matrix, thus making it less likely Matrix can attract new customers.”
Thanks for clearing up what you meant. However, Mercedes was given the oppunity to do the right thing, not that 1% of the home final sales price would not have helped the problems in my home. Mercedes isn’t spending a penny on any warranties, on any homes. In one of two letters from the Houston Division President Tom Cawthon last October, he stated my home has above aveage problems, thus 1% if they done anything, wouldn’t have fixed the bathroom problems. From my fist post to this one, to say I am upset, would be an understatement. I’m upset that this has happen to many builders (homebuyers) and more are on the way, sad to say. Many have been hurt and many more will be before this is all over and that will be a long time coming.
I am furious with this company and then seeing written that there is a very high likelihood that they will reorganize and start fresh again is a slap in the face to my family. We have been battling with this company for 4 years due to massive mold and poor building and we ending up losing our house to massive mold and everything we owned. We finally come to a PUNY settlement agreement several months ago and get 2/3 of three checks and they up and declare bankruptcy and now we are back to square one. They knew exactly what they were doing by declaring bankruptcy and I am shocked that they are allowed to reorganize and continue on as they have left many families and businesses in the toilet.
I also closed on my new Mercedes home in Florida on December 31, 2008 and was served two(2) days ago with a Certified Letter, inside was a lien by “Creative Touch Interiors” who furnished services consisting of carpet, tile, wood, and vinyl; how can a lien be placed on this property when I did not make any kind of business with that company? What can I do?
Would really appreciate your comments.
Erica,
We need to talk. I also have a Mercedes Home. Are you in Fl?
I see you are in Florida.. Creative Touch did the ceramic tile in our home in Homosassa Fl. What city is your home?
I recently bought a MH in Houston… I am wondering if I made a bad decision, due to lack of research. Anyone any suggestions? The house is yet to be built.
If there is an issue on title after closing on any Home, the title company is responsible to make good on it.That is why you have title insurance. Sometimes a lien may not be filed by closing, in any case contact the title company. Mercedes uses BDR title for most of their closings. Check HUD for their info. Just an FYI, Debary office of BDR has closed.
We purchased our home in October 2008, and received a lien claim (Creative touch) Is anyone out there filing a cliam in the bankruptcy court? We feel that we must be protected with a warranty on the main foundation and structural elements.We are also including the lien that was placed on lur home.
We are building currently in Texas and believe that we are better off than using some other large builders who have not yet gone into bankruptcy.
The court is overseeing their business and we believe all is well.
This may not true for those who bought before the bankruptcy.
They are still the best buy that we havd found
Closed in January and now have subcontractors sueing over mechanics liens. What can I do?
Sorry, sent the previous msg prematurely.
Adria or Cali~Girl, do you have a cc or website reference for the ruling allowing but not requiring Mercedes to honor warranties up to 1% of sales price? I have a cc of their Request, filed same day as Chapter 11, but never saw the Court’s ruling or results. Mercedes Jacksonville has been taking the “official” position that the filing RELIEVES them of warranty obligations under pre-Ch 11 closings; and (somewhat contradictory), if the underlying subcontractor won’t do business with them (probably because they weren’t paid), Mercedes can’t do anything (hogwash, other contractors are available with the requisite skills/trades)
We’re in St Augustine Fl, closed January 7, ‘09, same lien notices and same problem with Mercedes walking away from the warranty. Our title insurance company is providing guidance and assistance on the Liens and we will file a Proof of Claim in at least those amounts, with the Bankruptcy Court (deadline in 29 June). Anybody who received lien claims should contact their title insurance company immediately.
Regarding the warranty issues, My “for Dummies”-level research indicates that we are all “unsecured creditors” and “warranties are treated as contingent and unliquidated pre-petition general unsecured claims in a bankruptcy case. Accordingly, unless the debtor makes special provisions for these claims in a plan of reorganization, purchasers holding home warranties may be placed at risk.” Additionally, the warranty obligation is considered an “executory contract,” and the DEBTOR can decide “whether to keep these contracts (if they are favorable) or ‘reject’ them (if the debtor feels that the contract isn’t favorable to it).”
Addtionally, while there should be an Unsecured Creditors Committee already formed by the Trustee, it’s membership is generally drawn from the 7-11 largest unsecured creditors (and no homebuyers appear on that list in the Chapter 11 filing), so we are not even represented on any such committee. However, I understand we can ask the US Trustee to include a “class” representative on that committee if we can “demonstrate that our claims are not adequately represented among the largest creditors designated by the debtor and solicited for committee membership.” I’m thinking about sending that letter myself, anybody want to join in?
I am considering buying a Mercedes home in FL. How do I find out if there are any mechanics liens or interior decorator liens out there?
Marty,
Do you mean liens on an existing house? FL has great open records and the more urban counties are on-line. Find your County public records search engine, enter the present owner’s name, select “lien” as the type of document, best to limit the date range to e.g. the last 2 years, and hit “search.” If you don’t have the present owner’s name, you can enter “Mercedes.” If you have a real estate agent, he/she ought to be very familiar with this search