Homebuilder-Bankruptcy.com

Since the bankruptcy filing from more than a month ago, the bankrupt builder has not sold any homes. According to lawyers for Guaranty Bank, the builder has not even identified specific properties for sale.  What John Laing Homes has done, however, is to state the projects which it clearly intends to exit. These are listed as “Abandoned Projects” in exhibits submitted to the bankruptcy court. The John Laing Homes Research Report provides a list of these abandoned properties.

What happens to these abandoned properties?

One scenario is that construction would be at a stand-still, with parts of the projects remaining unfinished. This definitely reduces the home values of these communities. One example is John Laing Homes’ Stapleton Project in Denver, Colorado with unfinished common areas and the builder has no definitive plans for completing the construction.

The best which the builder could say in court filings was that they had made a proposal to a bank and they believe the bank is considering the proposal. Remember to consider what this means in today’s tight credit environment, with banks facing problems in the credit crisis.

If you are thinking of buying a home in the community, think twice when considering the time-line for which work-in-progress can be completed. Another thing to think about is whether you should ask the builder or existing homeowner for more concessions and discounts.

A worse scenario is presented by Wells Fargo in a motion for adequate protection. The bank claimed that projects (including Mare Island, Port Hueneme, Stapleton) “have not been adequately weather-proofed and therefore are subject to damage and deterioration from exposure to the elements. In addition, many of the Projects and/or homes or units located thereon have not been appropriately secured to limit the general public’s access, thereby exposing the Projects and the improvements thereon to potential vandalism and liabilities associated with any injuries that may occur thereon.”

John Laing Homes responded that the structures built upon the projects are locked and installed with alarm systems that are connected to the local authorities, and that periodic inspection was performed. Well, just to be on the safe side, spend a little more time examining homes by bankrupt builders for sale. Also, cross-check the homes which you are considering buying against the list of Abandoned Projects to make sure that you won’t be stuck with a home in an unfinished community.