Bankrupt Home Builder Resurfaces
Local 2 Investigates has learned the owner of Royce Homes is seeing a lot of green. Fifteen miles away in the Lakes of Cypress Forest, we found new home builder, Vestalia Homes, building houses. John Speer, listed with the Secretary of State as the only board manager of Vestalia, opened the company Sept. 29, 2008, just three weeks after we reported Speer closed the doors of Royce because of financial problems. The Web site for Vestalia Homes touts "decades of experience," with no mention of Royce. "If they're gonna rely on those decades of home building experience, they might as well disclose where they came from and what they're basing that claim on," said Monica Russo with the Houston Better Business Bureau.

Bankrupt Home Builder Resurfaces

By Amy Davis
HOUSTON -- Local 2 investigates the fallout of a big Houston home builder that went bankrupt.

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Maybe you've seen the abandoned homes. Some are incomplete and falling down. We've learned Royce Homes may be down, but the former owner is not out of the business.

KPRC Local 2 investigative reporter Amy Davis explained why some are questioning his comeback to the Houston housing scene.

In the Grant Meadows subdivision in northwest Harris County, we rounded up a group of homeowners.

"I thought that this was gonna be our dream home," said Jesse Torres.

It's a subject that has everyone we spoke with down in the dumps, just like their neighborhood.

"Houses are in disrepair. Fences are in disrepair," explained homeowner Matt Adams. "The whole neighborhood's been left in ruins."

"I am stuck here," said his neighbor Jerry Swearingen. "I cannot sell my home. I cannot get what I paid for it."

"We need help out here," said homeowner Keith Ferguson.

This wasn't how Grant Meadows was supposed to turn out. Instead of unfinished sidewalks, picture a splash pad. There should be a community center instead of an old couch someone dumped at the back of the neighborhood.

"They really sold us on all the amenities for our kids," said Jeannie Torres.

But, weeks after Jeannie Torres closed on her home, the builder and developer of Grant Meadows, Royce Homes, closed its doors.

There was no time to build that splash pad, community center or even the rest of the homes to finish the neighborhood.

Instead, Royce agreed to go into bankruptcy when its creditors filed an involuntary bankruptcy.

"I definitely think that they knew when they sold us our house that something was wrong, that they were in trouble," said Torres. "Yet, we were never told anything. I think that's why I blame Royce because they should have been more forthcoming."

Homeowners figuratively left in the dark when Royce went bankrupt are now literally looking for light.

Royce stopped paying the bill for the street lights in Grant Meadows in July 2008.

Reliant recently switched them off, and told homeowners they must pay the $14,000 owed before they can turn them back on.

"It's pitch black out here at night," said homeowner Evit Byrd, who planned to retire in Grant Meadows with his wife. "You can't see anything."

But while homeowners have a hard time seeing anything after dark, Local 2 Investigates has learned the owner of Royce Homes is seeing a lot of green.

Fifteen miles away in the Lakes of Cypress Forest, we found new home builder, Vestalia Homes, building houses.

John Speer, listed with the Secretary of State as the only board manager of Vestalia, opened the company Sept. 29, 2008, just three weeks after we reported Speer closed the doors of Royce because of financial problems.

The Web site for Vestalia Homes touts "decades of experience," with no mention of Royce.

"If they're gonna rely on those decades of home building experience, they might as well disclose where they came from and what they're basing that claim on," said Monica Russo with the Houston Better Business Bureau.

Russo says Royce Homes stopped answering customer's complaints to the BBB years ago.

"They didn't respond," she said.

John Speer didn't respond to our calls or e-mail either. We stopped by his home, listed for sale at $9.8 million. We found the home gated. Speer had no response for us or his former customers who say they're trapped.

"I don't think Royce should move on," said Fergsuon. "What they did was wrong. They came out here and promised us the world and pretty much lied to us."

"I don't feel they should build any houses until they finish the neighborhood that they've been in," said Grant Meadows homeowner Jeff Cummins.

It's not just Grant Meadows. Westwood Gardens, near the Beltway and West Road, was another former Royce neighborhood. You can now see unfinished homes boarded up and run down.

At Westwood Gardens, WG homes has purchased some of the empty lots to pick up where Royce left off. While WG Homes sales staff told me they have no relation to the old Royce Homes or its executives, the phone number on WG Homes Web site was the same number listed for Vestalia Homes.

When we called, the former vice president of Royce, Shonna Speer answered the phone, but she wouldn't answer our questions.

Two days later, that phone number on Vestalia's site was changed.

"This happens all the time," said attorney Rich Tomlinson.

Tomlinson says like it or not, there are no laws to stop John Speer from starting a new company and never completing the work in Grant Meadows or Westwood Gardens.

"There may be a moral obligation," said Tomlinson. "But if you're asking about the law, part of the idea of bankruptcy is to give people a second chance and the opportunity for a second chance. And when they do away with one company, then other companies may arise from the ashes. But, it doesn't mean that anything was done wrong."

Tomlinson says Speer would only be responsible if he took assets from Royce to start his new company.

That is what the trustee assigned to the bankruptcy is now investigating.

That trustee says, so far, Royce owes more than $17 million to various businesses and homeowners, but he believes there are many people who have not filed yet.

If you are owed money, even if it's from warranty work that was never fulfilled, you have just three days left to file what's called a proof of claim so that you might be reimbursed.

You don't need an attorney and you can do it online. For directions and a link to the form you need to fill out, check out the Ask Amy blog.