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Buyers wanted dream homes, got a nightmare

A builder's lean times trickle down to Spring Hill clients, who face unfinished work and liens.

By DAN DeWITT
Published October 11, 2005

	[Times photo: Keri Wiginton]
	Sherri Romanowski signed a construction agreement with Designer Homes in March 2004. Her home is yet to be finished. She wants to get out of the contract but says more than $30,000 is still owed to subcontractors. "It's horrible, horrible," she says.

SPRING HILL - Sherri Romanowski has distilled her complaints against Designer Homes Inc. to a few lines scrawled on the rear window of her Toyota Corolla:

"18 Months. No House. Deadbeat Builder."

Romanowski is not alone.

Though the contractor all but stopped applying for building permits a year ago, 35 of its homes remain incomplete, according to Hernando County records. Eight Designer buyers have filed complaints with the Development Department, far more than against any other contractor, said investigator Ray Heyduk.

"A contractor will normally get one or two a year," Heyduk said.

And judging from the number of outstanding permits and telephone calls he has received from angry Designer buyers, many who have not filed formal complaints are in the same basic situation as Romanowski, Heyduk said.

Work on their houses has ground to a halt as Designer failed to pay subcontractors. The subcontractors and suppliers, besides refusing to continue to work, have placed liens on homes for money they are owed. That means buyers must essentially pay twice - to Designer and the subcontractor - to escape their contracts.

Meanwhile, the partly completed homes - poorly built to begin with, many buyers say - deteriorate as they sit exposed to the elements.

The problems do not always end when owners move in; at least two of the complaints filed with the county address construction flaws in completed homes.

A license inspector for Citrus County, Kimberly Corbin, said the building division has not received any complaints about Designer's work in Citrus. She said she looked into the contractor's record here after hearing from Hernando County's Development Department.

Heyduk met with Designer owner David Pfleger last month and asked him to satisfy subcontractors' liens and to hire an engineer to determine what repairs he must make on his homes.

Hernando County has not restricted Designer's right to build new homes, Heyduk said, so it has a chance to work its way out of debt - as Pfleger says he plans to do.

But Romanowski and others say that allows unsuspecting buyers to walk into the same trap they have.

"It makes me sick that he could get away with this. It's horrible, horrible. It's our life savings we have put into these homes," Romanowski said.

Another customer said he has been brought to the verge of bankruptcy paying both rent and installments on his construction loan.

"My wallet's dry, my pockets are empty and bill collectors are screaming at me," David Johnson said. "Yet right now, people are walking into Designer getting ready to buy their dream home."

Heyduk said he has been patient with Pfleger partly because of Designer's unusual circumstances.

The company, which is based in Spring Hill and builds in Hernando and Citrus counties, established a good reputation in its first six years of operation, Heyduk and some customers said. Then, last October, Pfleger's brother, Donald, who held the company's only general contractor's license, suddenly died.

"When Don was around, everything was great," Johnson said. "But since Don's passing, it's gone down the tubes."

David Pfleger received permission to temporarily act as a contractor until one of his supervisors, Steven Hill, received a contractor's license.

In the meantime, he said, he faced the same adversity as other builders, including a labor pool stretched thin by the demands of the booming market and shortages and rising prices of supplies, especially after hurricanes hit Florida last year.

Also, like many other local builders, Designer grew rapidly last year as the market exploded; the company applied for 80 permits to build single-family homes in 2004, nearly three times as many as in 2003.

Though he has applied for only two permits this year - one of those for a contract signed before his brother's death - he is still signing new contracts and will soon submit applications for permits, he said.

He acknowledges that some of charges against his company are valid.

Though many homeowners overstate the problems with their homes, he said, some do have construction deficiencies. He blamed the problem on a lack of good labor. And though the contractors and suppliers are being paid, he said, "they're being paid slowly. . . . We're behind."

Pfleger said he is refinancing the company's four model homes to raise money to pay off subcontractors and honor the contracts with buyers, including the new ones.

"If I didn't think I could, I wouldn't sign the (new) contracts," he said.

Don't believe it, Bettie Tanner said: "If I knew all this, I wouldn't even look at his models."

Tanner and her sister, Mary Wharton, signed contracts with Designer in June 2004 to build homes on lots they owned a few blocks apart in Royal Highlands, in northwest Hernando County. The houses cost $132,000 each and were to be completed within nine months from the time the foundations were poured, Tanner said.

But Designer did not apply for the permits until Sept. 13, 2004, according to county records, and did not pick them up until mid January - about two months after they had been processed, Heyduk said.

"He just let them lay over there," Tanner said of the completed permits.

The work has progressed sporadically in the months since, and seemingly with little supervision, Wharton and Tanner said.

Long cracks have formed in the slabs and concrete blocks of both houses, the sisters said. Leaky felt covering the chipboard roof sheathing was installed in June and remains the houses' only protection from the weather.

During the summer rainy season, Wharton said, "it poured on that house day in and day out ... That house would be full of water."

After a subcontractor remarked that the concrete block work was the worst he had ever seen, Wharton hired a building inspector. The 14 possible deficiencies he found in her home included walls that leaned outward, trusses that were not properly secured, poor mortar joints and ill-fitting doors and windows.

"I have grave concerns of the safety and construction of this home at this early stage," the inspector wrote in his report in June.

Pfleger took issue with the inspection, saying it was done before the framing was completed.

But he acknowledged he has not fully paid all of the subcontractors and suppliers.

So far, they have placed $14,000 in liens on each of the two houses, Wharton and Tanner said. That is the main reason they have not changed contractors, though she has no idea when the houses might be finished or what they will look like once they are.

"It boggles the mind," she said.

Tanner said she is lucky in one way: She owns another house and has a comfortable place to live.

Romanowski, on the other hand, has been staying with her husband and 19-year-old daughter in her mother-in-law's house, where they will soon be joined by her daughter and son-in-law.

"So it will be six adults, four dogs, two cats and a bird," said Romanowski, 42.

When she signed a construction agreement in March 2004, she said, Designer told her to expect the permitting to take about three months and construction another year.

But as of last week, the floor was bare concrete, and her house lacked plumbing fixtures, appliances and electrical outlets; the partly completed swimming pool was half-filled with murky green water.

She hopes to get out of her contract with Designer, but said the money still owed to contractors totals more than $30,000, or nearly half of the money remaining in her construction loan to complete the house.

"It's been terrible," she said. "Every time the doorbell rings I'm nervous, thinking it's going to be another subcontractor with another notice (of a lien) to owner."

Pfleger said he will sit down and reach an agreement on outstanding payments with any home buyer who wants to get out of a contract.

"I'll work with them," he said.

When told that, Romanowski responded with a common complaint of Designer customers.

"How's he going to do that when I can't even get him to return my calls?" she asked.

When a sizable builder like Designer becomes overextended, it hurts a wide variety of small businesses as well as customers, said Bob Pasarela, president of Pasarela Drywall Inc.

Designer owes him for drywall installations on at least eight houses, Pasarela said last week, "and they're three or four months late on some of their bills. It's probably a month since I've gotten a check from them."

He has issued several notices that he intends to place liens on property but so far has not done so. That is likely to change soon, he said.

"They kind of got me in a big hole, you know," he said last week.

"What's happening is they can't close any houses," Pasarela said. "And when you can't close any houses, you can't get any money."

That's not entirely true, Pfleger said. He has finished about 30 homes since his brother's death and is on the verge of completing 10 more, he said.

"We are getting homes done," he said.

But every month of delay drives customers such as Johnson deeper into debt.

He signed a contract with Designer in January 2004, not long after he moved with his wife and two adult children from New Jersey. The house is not much further along than Romanowski's.

Johnson, 45, a warehouse manager with an electronics firm, spent almost all of his savings on the $100,000 down payment.

His house should have been completed seven months ago, he said. Since then - with work on his house at a virtual standstill - he has paid $7,700 for rental homes and hotel rooms.

"Every one of the subcontractors, from the tile guy to the cabinet guy, have made the same comment: "We would have been out of here a long time ago if we had gotten paid,"' Johnson said.

[Last modified October 11, 2005, 12:46:49]