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Coral Bay Homes Bankruptcy - 77 Unfinished homes
Wednesday, 21 June 2006

Homeowner Construction Fund An Uncertain Road To Recovery
Coral Bay homeowners have reported losing tens of thousands of dollars - $25,000 to $40,000 for deposits alone - and more in twice-paid impact fees and attempts to remove subcontractors' liens. Leonard said recently she and her husband have spent $60,000 beyond their contract with Coral Bay to resolve problems and another $25,000 to have another contractor finish their house in Shady Hills. See homeowner website: Coralbayhomes.com

Homeowner Construction Fund An Uncertain Road To Recovery

"I figure I'll just apply to the recovery fund and get my money back," the Tampa resident said.

He's among hundreds of businesses and homeowners in Pasco, Hernando and Citrus counties left hanging when Coral Bay President Steven Bartlett filed for Chapter 11 bankruptcy protection last month.

Like Prevoznak, other Coral Bay creditors hope to get back their lost money courtesy of the state's Homeowner Construction Recovery Fund. The little-known fund was set up in 1993 to help homeowners hurt by unscrupulous contractors.

But repayment may not be so simple, said Broward County lawyer Roy Oppenheim.

He won the fund's single-largest award: $100,000 shared by 13 homeowners in 1998. He knows what it takes to extract a payment from the $4 million recovery fund.

"They won't get their first penny for two or three years," Oppenheim said.

Even then, the process is complex and doesn't guarantee everyone will get reimbursed, he said.

For starters, homeowners such as Prevoznak and Alice Leonard of Port Richey will have to wait for the bankruptcy to play out to see what money - if any - they get back from the Hernando County-based builder.

After that, they'll have to sue Bartlett - Coral Bay's lone licensed contractor - in hopes of winning a judgment against him. Then they can present their claim to the fund.

The odds of the hundreds of homeowners and subcontractors getting repaid are slim, said bankruptcy lawyer Chad Bowen, who represents some of Coral Bay's creditors.

"We don't know if there's going to be enough money in this case to pay everybody," he said recently.

Bartlett said at Wednesday's creditors' meeting that his company, which had a before-profit income of $11.8 million in 2004, has $3,200 in the bank now. He said he expects to sell company property, including five undeveloped lots and two model homes, to raise cash.

The rules of bankruptcy put homeowners such as Prevoznak and Leonard - people with unsecured claims for breach of contract - at the bottom of the list of creditors to be paid, Bowen said.

That has built an aura of hope around the recovery fund, despite the hurdles to file a claim.

The fund is financed in part by a half-cent-per-square-foot surcharge on building permits. In 2003, the most recent year financial figures were available, the fund took in $2.9 million. Of that, $90,000 came from Pasco County and four of its cities.

That same year, Hillsborough County and its cities contributed $184,340.

The Department of Business and Professional Regulation, which controls the recovery fund, was unable to report payouts by county or the ratio of applications to fulfilled claims.

The agency did provide a list of people who received money in 2003. Those payments averaged $15,000.

State law limits the fund to paying out a maximum of $25,000 per claim or $250,000 per contractor.

Coral Bay homeowners have reported losing tens of thousands of dollars - $25,000 to $40,000 for deposits alone - and more in twice-paid impact fees and attempts to remove subcontractors' liens.

Leonard said recently she and her husband have spent $60,000 beyond their contract with Coral Bay to resolve problems and another $25,000 to have another contractor finish their house in Shady Hills.

Payments from the recovery fund are first-come, first-served, meaning a few large claims against Bartlett could leave the rest of his creditors with nothing, Oppenheim said.

"I don't think the fund is meant for this kind of massive problem," he said.

Contact Kevin Wiatrowski at (813) 948-4201 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

 
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