Lenders have foreclosed on more than $7 million worth of property in Battlefield Builders Inc.'s developments in Northern Virginia in the last two weeks, according to spokesmen for the financial institutions. Several other properties were sold in auctions last month.
Battlefield's attorney said the company is now "non-operational." When "all the lenders finish foreclosing, all the assets [of the company] will be gone," said the lawyer, Ronald L. Walutes. He said the company does not plan to file for bankruptcy.
The 10-year-old development company's collapse leaves many purchasers holding now worthless contracts on Battlefield homes. Roads, storm drains and other facilities are unfinished in several of the company's projects, and suppliers and subcontractors are stuck with more than $4.6 million in unpaid bills.
The financially strapped firm ceased work on most of its projects in Prince William, Loudoun and Fairfax counties early in January, according to attorneys.
Brothers James and Harry Ghadban, president and vice president, respectively, of the company and their sister, Mary Ann Ghadban, vice president for sales and marketing, could not be reached. Battlefield's office phone is answered by a recording saying the number "is not in service." The Ghadban brothers' home telephone numbers are unpublished, and there is no listing for Mary Ann Ghadban.
Suppliers and subcontractors are preparing to file the first in a series of court actions in hopes of collecting about $800,000 owed by the builder for work done on 36 homes in the Chestnut Run project in Loudon County, according to Michael R. Vanderpool, head of a committee of lawyers representing Battlefield creditors.
About 25 attorneys met last week to map out strategy for recovering the total of more than $4.6 million they say the developer owes for materials and work on its projects in Loudoun, Prince William and Fairfax counties.
SKI Real Estate Inc., a Pennsylvania company, took over 26 homes in Chestnut Run this week, by buying its own loan on the property for $2 million, according to Thomas J. Cavuto, an attorney for District Realty Title Insurance Co., which insured Battlefield properties.
SKI plans to finish work on the houses as soon as possible, and plans to honor contracts already signed by prospective purchasers on about 20 of the homes, he said.The Pennsylvania firm expects to reach an agreement with "a national builder of good reputation," which will complete the construction, according to Cavuto. Work could start as early as next week, he added.
Legally, the contracts on the homes were canceled by the foreclosure but SKI hopes to "sit down with the people [who signed them] and work out" a new sales agreement, Cavuto said. The company is not obligated to give the purchasers credit for deposits, ranging from $1,000 to $3,000, they paid when they signed contracts, but "probably will honor" the deposits, he said.
"We will try to hold the line on prices" specified in the original contract, but may have to increase the amount "in cases where, if we kept to the original price we would lose money," the attorney said.
Battlefield fell behind in its construction schedule many months ago, according to homeowners and contract holders. Carla Rodgers, who put down a $2,000 deposit for a $133,900 home in Chestnut Run last year, said she and her husband have spent $3,600 on a motel room since they moved out of their former home in November. They were assured they could move into Chestnut Run by Thanksgiving, Rodgers said. The couple has now rented an efficiency apartment in McLean, where they are paying $750 a month in rent.
Foreclosures took place in three other Battlefield developments within the last week, according to Carl F. SMith, senior vice president of Commonwealth Savings and Loan. Commonwealth paid a total of about $2.1 million for the property, he said, adding, "Essentially we bid what we had in them.
A total of 22 houses in Laurel Ridge and Riverview, in Prince William County, and Gateport, in Fairfax, were taken over by Commonwealth. Construction on them ranges from half to completely completed, Smith said.
"We will sell them as is, or we may have to complete them ourselves and offer them on the market," he said. The S&L is working on plans for selling the homes, and will honor contracts already signed on some of the houses "if we can."
A total of 12 vacant lots in Laurel Ridge and Riverview obtained in the foreclosure, will be sold in their present condition, according to Smith.
Washington Federal Savings & Loan Association foreclosed on houses and 29 lots in Poplar Tree development in Prince William, according to the S&L's president and chairman of the board, William F. Sinclair. Washington Federal's own service corporation will complete construction of homes now under way, will build on many of the lots and may sell some to other developers, he said.
The work could take from six months to a year, Sinclair said, adding "We'll get in and out as fast as possible." He said he does not know yet whether Washington Federal can sell the houses for the same prices in existing contracts.
American Home Funding Inc. foreclosed on other Battlefield property last weekbut did not give details of the sale and their plans for the property.
The suits Battlefield subcontractors and suppliers plan to file will ask for enforcement of mechanic's liens on homes where work was not paid for by the developer.
A mechanic's lien asks a court to order sale of the property to pay the debt. In practice, courts rarely order sale of a home unless the lien is very large, according to Vanderpool, head of the group of creditors' attorneys.
Vanderpool, who represents Lowe's, Battlefield's largest creditor among the subcontractors and suppliers, said his client will file the first suit, involving Chestnut Run houses, in Loudoun circuit court. Then, under provisions of Virginia law, from 25 to 30 other creditors will enter the action. Suits involving other Battlefield developments then will be filed one after the other, Vanderpool said.
Protection against mechanic's liens is included in nearly all title insurance policies, according to Cavuto. His client, District Realty Title, will fight mechanic's liens on Battlefield homes when and if they come to court, Cavuto said.
"We have a lot of experience in beating liens," he said, adding that he "has confidence that many will be knocked out."
The owner of a home on which a mechnic's lien is filed is not obligated to pay the debt, and in practice someone, usually the insurance company, will satisfy the claim rather than sell the property. In most such cases, Cavuto said, the creditors and insurance companies reach a settlement at "some point in the litigation."