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Buyers complain builder doesn't deliver

Coral Bay Construction has not finished their homes. They are angry and want the county to help to get the work done.

By DAN DEWITT
Published April 30, 2006

BROOKSVILLE - Robert Gwathny thought he had plenty of money to retire to Hernando County.

Gwathny, formerly a management consultant, sold his house in Connecticut for more than $500,000 and signed a contract in May with Coral Bay Construction Inc. to build a $286,000 home in Royal Highlands.

He has now paid most of what he owes the Spring Hill-based contractor, he said, but the company has finished little more than the concrete block walls and roof.

Meanwhile, Gwathny's savings are being consumed by monthly payments of $1,050 to rent a house in Spring Hill and a storage unit. With the completion of his new home at least several months away, Gwathny may be forced to do what he had hoped to avoid - take out a loan to finish his house.

"There's no stucco, no drywall, no insulation. . . . You'll find a bunch of trash because they never put a trash receptacle of any kind on the lot," said Gwathny, 66.

"I love being down in Florida, but this leaves a bad taste in your mouth. It has a tremendous emotional impact."

Gwathny is one of nine Coral Bay clients who have filed written complaints with the county Development Department claiming the company has not completed contracted work.

About a dozen more Coral Bay customers have called with informal reports of similar problems, said Tim McGrath, the Development Department investigator assigned to Coral Bay's case. And last month, Cemex Construction Materials Inc. sued Coral Bay, claiming it owed $269,332 for concrete Cemex had supplied.

"They don't appear to be paying their bills," said Neal Sivyer, the Tampa lawyer representing Cemex, which is based in Mexico and is one of the world's largest cement companies.

Coral Bay's difficulties mirror those of another Spring Hill builder, Designer Homes Inc., and are a predictable result of last year's booming housing market, said Grant Tolbert, county development director.

"When things have been as good as they have been for three to five years, there's always going to be some builders who get too far extended," Tolbert said.

Though several Coral Bay customers said the county should push to revoke the company's right to pull building permits in Hernando, Tolbert said he has no plans to do so.

"That would essentially put the company out of business, and then all the existing homes would not be completed," said Tolbert, who has resisted taking such an action against Designer for the same reason.

Instead, the Development Department is monitoring Coral Bay to make sure it is completing its existing contracts and not receiving permits for more work than it can do, Tolbert said.

The company has 77 unfinished houses in Hernando, McGrath said, and has applied for 40 additional permits that either have not yet been approved or the company has not picked up. Coral Bay has applied for new permits as recently as last week, McGrath said.

Some Coral Bay buyers say that means the county is allowing new buyers to fall into the same trap they have.

"I believe the county should put a hold on them starting new homes and make them finish what they've started," said Jenny Nathanson, 34, who hired Coral Bay to build a house in Pasco County.

Steve Bartlett, who founded Coral Bay a decade ago, said the county is right to give his company a chance to work its way out of debt.

Coral Bay, which does business in Hernando, Citrus and Pasco counties, is on the verge of securing a $950,000 bank loan that would pay off all its creditors, including Cemex, he said.

He also said Tolbert was right in his assessment of Coral Bay's problems.

The firm had typically built about 50 homes a year through the first part of the decade. Last year, it signed contracts to build more than 80 houses, he said, and was unable to pay all the subcontractors and suppliers.

"I guess we just weren't prepared for the explosion in sales," he said.

"We've had major cash flow problems for the past few months . . . and I take full responsibility for that."

But Coral Bay customers said Bartlett not only has failed to take responsibility for his company's problems, but also has refused to explain them.

"They just never call you back," Nathanson said.

Other buyers were suspicious of Bartlett's claim that he would soon have a bank loan, saying he had continually promised to finish work and then failed to do so.

He has also failed to pay suppliers and subcontractors, which has put some buyers on the hook to pay for labor and materials twice, they said.

For example, Robert Alberti hired the company in May to build two houses in Spring Hill and paid for each phase of construction in advance.

But state law allows suppliers and subcontractors seeking payment for debts to place liens against both the buyer and the general contractor. And Cemex has placed a lien on Alberti's houses for $9,282 and has included him in the suit filed against Coral Bay.

Tolbert said buyers can avoid this problem by making sure they receive a document called a "partial lien release" from contractors before they pay for each phase of the work. The release serves as legal proof that contractors have received the cost of their labor and materials and protects the buyers from liens, Tolbert said.

Knowing that comes too late for Alberti, 57, who retired to Hernando County after selling his janitorial business in South Florida. He cannot afford a lawyer to fight the suit, though he might be able to do so in cooperation with the other buyers who have been sued.

Meanwhile, he hopes Coral Bay will pay off its debts and finish the job.

He's not optimistic.

The contract originally called for Coral Bay to finish the houses in February.

"He just assured me I'd be in there in June, but who the hell knows. They haven't even dug the pool," Alberti said.

"This guy is slow. This guy is very slow."

Dan DeWitt can be reached at dewitt@sptimes.com or 352 754-6116.

[Last modified April 30, 2006, 00:58:16]