Buyers who were stuck with what they feared were worthless contracts on homes under construction in a Loudoun County subdivision when the developer went under have been told they probably will be able to buy the houses at the same prices they agreed to last year.
About 15 of the more than 20 potential buyers met last week with a representative of SKI Real Estate Inc., the Pennsylvania company that bought houses in the Chestnut Run development at a foreclosure sale after Battlefield Builders Inc. defaulted on the loan. The owners of Battlefield, Jimmy, Harry and Mary Ann Ghadban, filed individual business bankruptcy petitions recently in federal court in Alexandria.
SKI expects to be able to go through with the home sales for the same prices and at many of the same terms contained in contracts the buyers signed with Battlefield in almost all cases, said the representative, Thomas J. Cavuto, an attorney with the firm of Thomas & Fiske.
Cavuto also said SKI will give buyers credit for cash deposits they paid to the Prince William County developer when they signed their contracts, with the amount of the deposit to be deducted from the buyers' settlement costs. To get credit for the deposits buyers must prove they made the payment and be willing to sign over to SKI their rights to recover the money from Battlefield or its owners, he said.
Chestnut Run is the only one of Battlefield's 11 other subdivisions in which SKI has purchased property, Cavuto said. The other developments are in various stages of construction and foreclosure sales have been held in several. In many cases, deals with former contract holders are not settled.
Most of the Chestnut Run buyers said they have invested so much time and effort in the wait for the homes that they plan to go through with the sales if they like the contract terms SKI offers them. Cavuto said he hoped to have contracts ready to present to the buyers very soon. The agreements buyers signed with Battlefield are no longer valid because a foreclosure sale has the legal effect of cancelling contracts.
Jeri Leary said she and her husband probably will go through with the Chestnut Run purchase if they like the terms offered by SKI. The Learys sold their former home in Falls Church last fall, after they were assured they could move into Chestnut Run in November, and have been renting ever since.
Jerry Mixon moved here from New Mexico last October when Battlefield representatives told him they could go to settlement and move into their Chestnut Run home within two weeks. Mixon and his wife, Debbie, are still waiting, living in a rental home with all their belongings in storage. "I can't even do my taxes because all my records are stored," he said. They said they expect to buy the house if the contract terms are right.
Susan and Patrick McConnell, who they moved into their Chestnut Run home on a Saturday three months ago after Battlefield representatives told them settlement would take place the following Monday, said they hope to stay put.
At least two other contract holders at the meeting said they had had enough of Battlefield Builders and Chestnut Run. Sylvia Sutton and her husband have already bought another home and have filed a lawsuit against Battlefield. Under terms of the contract Sutton and her husband signed with Battlefield last June 6, the Suttons were required to put their former home on the market within five days, she said. The Suttons sold their home quickly and lived with a friend for 4 1/2 months.
A few buyers were concerned about the effect of mechanic's liens on the titles to their homes. Subcontractors and suppliers who were left with more than $4.6 million in bills Battlefield didn't pay have filed liens on many of the developer's homes and some are moving to collect on the liens through court action. A mechanic's lien asks a court to order sale of a property to pay the debt, but in practice courts rarely order sale of a home unless the lien is very large, attorneys say.
A lawsuit to enforce a mechanic's lien could take years in court, which some buyers feared would cloud their titles. Cavuto told them District Realty Title Insurance Co., which insured Battlefield's properties, will provide insurance against liens on the houses they buy from SKI. If a current buyer wants to sell his home in the future and there are still liens against it, the company will provide the same coverage at normal rates to the new buyer, he said.
District Realty Title will defend SKI homenuyers in court against mechanic's liens suits and will pay the debt if the defense is not succesful, the attorney said.
John Janco, who held a contract on a Chestnut Run house, said he was not reassured. "Anybody would be crazy" to go through with such a purchase, he said. "What if I want to sell two years from now? Eighty-five percent of the buyers would be scared off no matter what kind of protection they had."
In discussing contracts, Cavuto said final decisions on whether SKI will stay with the original prices will be made on a case-by-case basis when the company goes through the agreements in the Battlefield contracts. Although in many cases Battlefield had agreed to pay the real estate agent's commissions and other charges at settlement, Cavuto believes SKI will be able to stay within the contract terms. If the terms would result in a cash settlement due from the company, SKI "would have to make another kind of deal" with the buyer. The attorney said this situation is not likely to arise except in "rare" cases.
The new owners of the property have several reasons for deciding to honor the original sales figures named by Battlefield when it is possible, although the homes have appreciated in value since those prices were set, according to Cavuto.
"We could get perhaps $10,000 or $15,000 more per house by putting them back on the market but we couldn't get it tomorrow. In the meantime interest rates could go up," he said. SKI wants to get in and out of the project quickly but "wants to do it well so people won't say they regret they bought from SKI."