After a week of fielding calls from friends, clients and realtors asking what’s going on – I figured I’d post on what I know. Buyers of Regency Homes have found themselves in a conundrum. They still want a Regency home, they’ve fallen in love with it. They’re confused if or if not Regency has filed for bankruptcy. The quick answer is no, they have not (I just wanted to find a reason to add a clip from The Office.. that’s all). After reading the Des Moines Register, it sounds like Jamie Myers (the President of Regency Homes) is doing everything to avoid it (bankruptcy that is).
What is important and not talked about is how difficult it is right now to close on a Regency Home. Just in case you’ve been out of the state or the country in the past couple weeks (which was the case with one caller)- Regency Homes has made public their difficulties in this changing market. They didn’t do many things much differently than the other builders across town, but unfortunately – the big fall much harder than the small.
Back on topic – After the news was announced last Friday, contractors hurried to file their liens to do what they can to get paid for services rendered. Over 350 businesses flocked to file liens from a couple hundred bucks to over a hundred grand. Serious money. Of course, everyone was afraid that following Regency’s announcement they’d be following with Bankruptcy. Thankfully they haven’t (I wouldn’t wish that on anyone).
Today, in the register there was a great article by Steve Dinnen and Donnelle Eller. There was an interview with Mike Knapp (Decision Maker over at Iowa Realty). Iowa Realty is Regency’s real estate company of choice. Knapp went on the record saying that roughly 10% of 2,291 listings are Regency homes. Currently they have 58 homes in ‘Sale Pending’ status. That’s 58 buyers that are wondering, “Now What?“.
Here’s what I know (thanks to the article and Mike Knapp):
- Iowa Title Guaranty, a state agency, and other title insurers now require lien waivers from all subcontractors in order to issue a title certificate or policy on a Regency property.
- “With up to 80 subcontractors on a project, and a very limited staff at Regency, it will take significant time to collect these waivers,” the company said in a memorandum to agents. “We cannot estimate when Regency will be able to deliver clear title on homes finished within the last 90 days.”
- The lien waivers are not required on homes constructed more than three months ago.
- Regency cannot in good faith sign a warranty deed if it knows there could be additional liens on the property.
- Over the past week, Iowa Realty said it closed on the sale of two Regency homes. A couple of other Regency closings were not completed because of lien concerns (I personally know of two…I’m sure there were many more).
- Knapp said – “The houses will get done and they will be sold. The question is when and by whom…In the meantime, the challenge is to mitigate injury to buyers as well as others.“
- Knapp also said pending sales need to be evaluated on a case-by-case basis. The company is advising Regency home buyers to discuss the purchase with attorneys, including whether terminating a purchasing agreement would impact their earnest money.
Yes, the last part is probably the best takeaway and the advice I gave those who called me. Consult with an attorney. The last thing you want is a home that you cannot get clear title on and have huge headaches in the future.
I guess all we can do for now is sit and wait. If you’re wondering what you should do – consult with a realtor or attorney. If you’re not sure who to talk to, I’d be glad to connect you with someone!
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