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Tuesday, 21 November 2006

Builder's bankruptcy leaves new residents in lurch
David Jarashow will be the first to tell you, half in good humor and half out of frustration, that he is cursed. Two years ago, he lived in Marlboro Summit, a 70-unit development on Tennent Road where entire backyards would become lagoons whenever it rained. In June, hoping to escape that scenario, and with dreams of living in a bigger house with a bigger — and dry — yard, he moved into his new $1 million home in Crine West.

Their dream home a living nightmare

Builder's bankruptcy leaves new residents in lurch
Posted by the Asbury Park Press on 11/19/06

BY JAMES A. QUIRK
FREEHOLD BUREAU

MARLBORO — When the Jarashow family moved into their new home this summer, they thought they were leaving their struggles with flooded backyards and drainage problems

(STAFF PHOTOS: BRADLEY J. PENNER)
David Jarashow sits on a curb next to an unfinished storm drain in front of his house in Kara Homes' Crine West development in Marlboro.
A mound of dirt can be seen through a picture window (above) in the Jarashow house. At left is the interior of an unfinished house in the same Crine West development in Marlboro.

 

behind them.

David Jarashow will be the first to tell you, half in good humor and half out of frustration, that he is cursed. Two years ago, he lived in Marlboro Summit, a 70-unit development on Tennent Road where entire backyards would become lagoons whenever it rained. In June, hoping to escape that scenario, and with dreams of living in a bigger house with a bigger — and dry — yard, he moved into his new $1 million home in Crine West.

The Jarashows are one of the last families to purchase and actually move into a home in Crine West. The builder, Kara Homes Inc., one of the largest builders in Monmouth and Ocean counties, filed for Chapter 11 bankruptcy protection on Oct. 5. It owes creditors — including banks, suppliers, employees and customers — $227 million.

Crine West is one of three developments within Marlboro's boundaries that have been abandoned by Kara Homes as it struggles to pull itself out of a tangled pit of debt and mismanagement. Yet unlike the smaller Emerald Hills and Buckley Estates developments in Marlboro, Crine West is less than half finished, as roughly 35 homes of the approved 84 have been built.

No one living in Crine West is happy about their environs. The roads have not been completely paved. Storm drains jut out from unfinished curbs, still encased in wood bracings. Manhole covers rise from the roads like giant molehills. Whenever it rains, it floods: The incomplete drainage system within the development gets overwhelmed quickly, said resident Mark Ellenberg. Striking $1.3 million homes border on vast swaths of debris, mud and black tarp fencing, as well as skeletal wooden frames or naked concrete foundations of houses that may never be finished.

"It's weird how there's a row of finished houses, and then at the front, near the entrance, there's that concrete foundation and nothing else," Jarashow said. "It's not exactly the rolling hills and vistas we expected when we moved here."

But there may be some light at the end of the tunnel for Jarashow and his neighbors. On Nov. 20, Marlboro became the first municipality in the state to pursue the $4.75 million in performance bonds posted by Kara Homes for Emerald Hills, Buckley Estates and Crine West. If the township can get the bond, the money will be used to finish the incomplete roads and drainage systems within the three developments, said township construction official Joseph LaBruzza.

"We had to do something to help our residents," said Mayor Robert Kleinberg. Officials with Kara Homes Inc. and David Bruck, the company's bankruptcy attorney, could not be reached for comment.

Other municipalities have explored taking action similar to Marlboro's, but have opted to wait and see what happens in bankruptcy court. In Stafford, officials put Kara Homes on notice that they would pursue the performance bonds posted on the half-finished The Landings at Manahawkin development if water and sewer work is not completed, but they have taken no further action.

Eric H. Lindenman, an attorney representing Bond Safeguard Insurance Co. and Lexon Insurance Co., through which Kara Homes issued $12.2 million in escrow deposit bonds, said it is too soon to comment on what impact Marlboro's action will have.

"Everyone has to protect themselves in a situation such as this," Lindenman said. "Everyone is staking their claim and positioning themselves as the case goes forward."

Whether Kara Homes can escape liquidation is unclear. On Thursday, U.S. Bankruptcy Judge Michael B. Kaplan ruled that the company can receive a $350,000 loan from Bear Sterns that will allow Kara Homes to remain afloat for two weeks.

Kara's agreement with Bear Stearns will give the company enough money to pay administrative costs, rent, insurance premiums and security at its developments. Kara needs to repay the loan at a 15 percent annual interest rate. The agreement gives Bear Stearns a say in Kara's decisions. The parties are scheduled to return to court Nov. 29 to argue about the rest of the $2.6 million loan originally requested by Kara Homes.

Kara Homes Inc. currently lists part of its assets as $5.3 million in cash bonds posted for various construction projects throughout the state, according to its bankruptcy filing.

David Jarashow considers himself lucky to be living in Crine West. He finds perspective on his situation simply by walking out of his driveway. There to the side of his property is a towering hill of topsoil, where, by now, Brian Briskin's home was supposed to be standing.

Briskin said he is one of the last homebuyers to put a six-figure deposit down on a home at Crine West. He did so 30 days before Kara Homes filed for Chapter 11 protection. Briskin is now among 300 homeowners around the state who paid deposits for a house in a Kara Homes development that has not been built.

"It's really quite unfortunate, because when I paid my last check, (Kara Homes) had to know what was happening with the company," Briskin said. "Now I think about it every day. We paid into the six figures, I'll leave it at that. We were so excited at this opportunity, and committed to the builder. And we were just really let down."

Briskin and Jarashow tell similar stories about what prompted them to buy homes in Crine West. Briskin lives in the Woodcliff development in Marlboro and was looking for a bigger home in a neighborhood that offered more of a sense of community. In shopping around for a new home, Briskin was quickly seduced by the interior beauty of the models shown by Kara Homes, and made fast friends with the people who would be his neighbors — soon his kids were running through hallways with their kids.

"They build a sexy house," said Mark Ellenberg, who gave an impromptu tour of his home and the half-finished neighborhood. A retired attorney turned real estate broker, Ellenberg's was one of the first 10 families to move into Crine West.

He, too, purchased his home after being impressed with various show models. Ellenberg's home is a stunning example of why Kara Homes grew so fast: A foyer that greets visitors with dramatic sweeping dual staircases; soaring cathedral ceilings; spacious rooms; a sprawling kitchen with a panoramic view of his back yard, a small forest of slender white birch.

Briskin said that on the advice of his attorney, he must wait until Kara Homes builds his house or his contract is declared void due to inaction, which will occur in June.

"The only thing that keeps me with a reasonably optimistic viewpoint is this: It's a resonably desirable piece of land in a desirable town," Briskin said. "Someone is going to build this at some point. The only problem is the uncertainty. You don't know if it's gonna be a year or a decade."

  

 

 

James A. Quirk: (732) 308-7758 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

http://www.app.com/apps/pbcs.dll/article?AID=2006611190391

 
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