Lennar Problems at Laurel Lakes

SARASOTA -- Is the Southwest Florida real estate market so hot that home builders and developers just don't care anymore and buyers can't be bothered with due diligence?

A homeowner revolt at Laurel Lakes Phase IV -- an expensive Sarasota subdivision -- might make you think so.

Some owners have been fighting for nearly two years to get into their houses during one of the region's most blistering markets. The value of their unoccupied homes has sometimes doubled, something that irks them all the more.

The Laurel Lakes IV subdivision has had a litany of problems with individual homes and with the neighborhood's roads, sewer and water connections and power.

Homeowners feel trapped between Lennar Corp., the huge Miami-based home builder that sold them their houses, and Rex Steven Horton, the Sarasota developer who was supposed to complete all the infrastructure.

Lennar executive Darin McMurray acknowledges that his company's customer service at Laurel Lakes left something to be desired. He said Lennar earned itself a "black eye."

Horton is less apologetic, blaming Lennar and other companies for damaging the infrastructure he already had installed and saying that it was mistake for him to allow the huge home builder to start building homes in the neighborhood before his work was completed.

He now insists that his work will be done within weeks but recently filed for a year's extension on the bond he had to file to cover the infrastructure's estimated cost. That means he has until October 2006 before Sarasota County would have the option to cash Horton's bond and do the work.

That leaves homeowners feeling that they have little choice but to sue, a move they fully realize could drag out the already snail-like pace of getting their homes completed.

Laurel Lakes Phase IV now has about 30 unfinished homes and 40 empty lots that are almost sold out.

Buyers point to poor communication and what they consider gross mismanagement and misrepresentation. For them, Laurel Lakes shows that Southwest Florida's booming home construction industry is just moving too far too fast and at the expense of consumers.

"Some people have land missing from their plots, the master drainage plan does not match the design and there are serious elevation problems," said Joyce Gugel, an interior designer who serves as the homeowners' spokeswoman.

Last week, the group hired Sarasota litigator Martin Garcia to position themselves to sue Lennar and possibly Horton's company, Barton Farms Inc., the land's owner and developer.

Lennar executives said they also might move against Horton. Meanwhile, some homeowners are amazed that the giant home builder could be selling houses without infrastructure.

Homeowner hell

Besides the delays, the stories at Laurel Lakes are of missing acreage; black mold; workers sleeping in nearly finished, half-million dollar homes; pools filled with debris and garbage; toilets in houses without water and full of human waste; ruined carpeting; sinking walkways; holes in roofs; and repeatedly missed occupancy deadlines.

Thomas and Paula Christopher, a Kirtland, Ohio, couple who bought their four-bedroom, three-bath house in February 2004, were told they'd be carving their turkey in their home by that Thanksgiving.

That won't happen even this year.

While acknowledging their individual problems, McMurray, Lennar's regional vice president for Southwest Florida, said he is more concerned with infrastructure.

McMurray, who helps run the Southwest Florida division for Lennar, a $10.5 billion company, is the corporate firefighter parachuted in from Fort Myers to douse the Laurel Lakes inferno. He arrived after homeowners refused to have further dealings with John Sellinger, Lennar's Sarasota division president. Gugel, who owns two homes in Laurel Lakes, claims that her group "Empowering the People" had to "corner" Sellinger.

McMurray acknowledges Lennar's problems. "We have failed, and have a black eye. We're not proud of this, and our job is to rebuild customer confidence."

He plans no changes in Lennar's local operations.

Lennar and its US Homes subsidiary built about 900 homes in the Sarasota-Manatee market during the past year. The giant home builder, which posted a $1 billion profit last year, usually does its own development.

McMurray said Lennar has been trying to reach Horton but that he has recently been "avoiding our calls."

"If I've got to take over the development, I will," McMurray said.

Huge gains a problem

Their experience with Laurel Lakes has left many of its homeowners questioning whether basic corporate responsibilities have been jettisoned in the race to build record numbers of new homes.

The big money at stake today is part of what has them so incensed. The home they got in 2003 costs almost double today. Though many would prefer to be done with Lennar, none are willing to forgo the money they'd lose by simply demanding their deposits back.

Eleanor Nelson, who bought for about $450,000, has looked at alternatives and found nothing comparable for less than $900,000.

To homeowners, their fight also raises questions about county government's power to effectively regulate developers and protect home buyers.

Even county officials admit surprise at the extent of Laurel Lakes' problems.

"I've not seen anything like this," said Terry L. Boswell, Sarasota County's general manager for land development and an 18-year county employee.

Nelson can't understand how government allows a developer to "sell us a house before the infrastructure is in." A house is not really "sold" until closing, and that only happens after the county issues a certificate of occupancy. Laurel Lakes homes are only "reserved" now with 10 percent cash deposits.

The insurance that the work will be done is a bond. The government requires an irrevocable letter of credit from a bank that amounts to 110 percent of the estimated infrastructure costs.

Barton Farms received plat approvals from Sarasota County on Oct. 27, 2004, a full 10 months after Lennar began taking deposits.

A developer has a year to install infrastructure, but can apply for another year, which Barton did recently. His bond cannot be used until Oct. 27, 2006. No one at Sarasota County's planning department remembers the county cashing a bond.

Until then, the only remedy for homeowners is a civil action, Boswell said.

And the mold that grew on many house frames open to the elements? That's a more "difficult item" because there is no building code requirement for dealing with it, said Greg Yantoro, Sarasota County's inspection manager.

'Prairie building'

Horton blames Lennar for much of Laurel Lakes' problems. He says Lennar crews damaged infrastructure, including a fire hydrant that's been replaced three times after trucks backed into it.

"Lennar crews cut through sewer lines, causing dirt and debris to enter the system," Horton said. "Water and irrigation systems were cut."

Comcast crews did damage as well, and Horton blames the county for changing certain power requirements "four or five months ago."

Homeowners' complaints that the lots are not as large as advertised are "without validity," Horton said.

He acknowledges that it was a mistake to allow Lennar to begin "prairie building" before infrastructure was completed. "I allowed it, but it backfired." He adds that he is "not happy, but not angry" and "a little bit responsible, but not 100 percent."

He insists that there are no serious issues now with water or power and that major repairs will be completed "within a week or so."

But the buyers of Laurel Lakes' $500,000 homes said they still have a long list of problems.

Eleanor Nelson and her husband, Archie Nelson, bought in March 2004 and were told by Lennar that they would be in by January 2005. With that in mind, they sold their Pennsylvania home and rented a two-bedroom Sarasota condominium and storage space for more than $2,100 per month. They estimate the delay will have cost them $45,000 in cash -- 10 percent of their purchase price.

They've been promised five different closing dates and are still months away. When the latest written closing date of Oct. 21 was missed, no one from Lennar called.

The home is built but the utilities are not connected. The Nelsons found their unfinished pool half-full of fetid storm water, construction debris, garbage and trash.

They documented holes in the roof eaves and claim that their land was not properly compacted, pointing to sinking walkways, driveway and yard.

Their shrubs are dying and their mulch is mixed with debris. A wall inside is bowing outward and kitchen countertops and the backsplash were improperly cut and installed. Quartz countertops are missing and the master bath's tub faces the wrong direction.

The Nelsons' advice to potential homeowners? Don't hurry just to get what you think is a deal.

"Speak with your prospective neighbors and do your homework before you sign," said Eleanor Nelson, acknowledging that amidst all the problems, the couple still finds a distinct irony.

"We both love the house."

The problems

AT LAUREL LAKES

Complaints about Lennar Corp., the general contractor

Repeatedly missed closing dates

Almost two-year waits for homeowners

Poor site preparation and compaction

Sinking drives and walkways

Homes open to elements too long -- black mold on frames

Missing roof tiles

Holes in roof eaves

Incorrect interior installations

Features changed without notification

Incorrect paint colors

Walls bowed outward

Poor security: human waste in dry toilets

Tiny dying shrubs and filthy mulch

Ruined carpets

Workers asleep in homes

Garbage, fetid water in pools

AT BARTON FARMS,

Complaints about the developer and land owner

Lift station delays

Allegations of missing acreage

Safety issues: missing fire hydrants

Traffic control issues

Power and water delays

Street construction delays

Allegations of elevation problems

Storm water drainage issues

Water re-use and irrigation issues

Source: Laurel Lakes home buyers

Source