Manor Builders' customers may lose deposits Buyer who had deposit in escrow with firm found account closed

Real estate

March 05, 1998|By Robert Nusgart | Robert Nusgart,SUN STAFF

Home buyers who had deposits in an escrow account with Manor Builders Inc. -- a Hunt Valley-based firm that ceased operations last week -- apparently have lost their money.

According to Connie Carson, who had signed a contract for a townhouse to be built at Summerwoods in Owings Mills, when she called First National Bank of Maryland to inquire about her $1,000 deposit, she was told the escrow account had been closed. A call to First National Bank confirmed that the account -- under Phoenix Land Trading/Manor Builders -- had been closed in January.

It was not known how much money was withdrawn from the escrow account.

Palmer C. Williams Jr., principal of the firm, last week placed a note at the Summerwoods sales trailer, saying that because of health and business problems he was ceasing operation and leaving the state. A production superintendent for the builder estimated that Williams owed suppliers and contractors more than $300,000. Manor Builders also was involved with the communities of McDonough Run in Owings Mills and the Village of Gracecroft near Havre de Grace.

The Baltimore office of the FBI and Baltimore County States Attorney office could not confirm that an investigation had begun into Manor Builders or Williams. The Consumer Protection Division of the Maryland Attorney General's office did confirm that there is one open complaint against Manor Builders and that it is being handled by its mediation unit.

According to John Nethercut, assistant attorney general in the consumer protection division who addresses most real estate complaints, there are only three scenarios when a builder lawfully can withdraw deposit money from escrow accounts: When a deed is granted at settlement, when a builder decides to refund a deposit or when a buyer defaults on a contract. Otherwise, said Nethercut, it is a felony for a builder to touch escrowed money.

As for recovering their money, Nethercut said it all revolves around finding the builder and hoping that he still has assets. But "chasing a guy on the run makes it difficult to collect," Nethercut said.

Carson said she signed a contract the day after Christmas for a $125,000 townhouse. Williams had requested a $2,500 down payment, but only required an initial deposit of $1,000 with the remainder to be paid in $500 increments over the first three months of 1998.

Carson learned the fate of Manor Builders and the escrow account only after her mortgage company informed her that they were unable to secure a master appraisal of the community from Williams, who had apparently ceased operation.

She was successful in putting a stop payment order on her $500 check for January, but later learned from First National Bank that her initial deposit was gone and the escrow account was closed. She sympathized with other buyers in the community who are just learning about Manor Builders situation.

"I don't think a lot of them have found out yet," she said. "This has been a very bizarre situation."

Five families already have settled in Summerwood. On March 24, the remaining 59 unfinished homes and lots will be auctioned.

Pub Date: 3/05/98

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