Failed Norristown condos still a burden to buyers

Terry Derby had to surf on seven different couches. Ellen Frank was turned down for credit cards and had trouble leasing a car. Ryan Schofield figures he might never again be able to buy a house.

Home ownership was not supposed to be like this. Instead of buying a haven, five Norristown condominium owners say they wound up with a horror.

The residents are left fighting for their credit ratings and some sort of compensation.

It's a years-long saga - one yet to end - that spurred changes in the way the seat of Montgomery County monitors construction projects. But that offers little help to the people caught in a financial and legal tangle not of their own making.

"You buy a house and it's supposed to be your home," Schofield said, "and then it becomes your worst nightmare.

"And there's no easy way out."

The 26-unit building went by the name of the Rittenhouse Club when Collegeville developer R. Bruce Fazio was building it, beginning in 2005. Now it's known simply by its address: 770 Sandy St.

It sits on a hilltop in the eastern part of Norristown, with an expansive view of the Schuylkill. The prices seemed a bargain. A two-bedroom, two-bath unit had a base price in the low to mid-$200,000s.

Fazio said Thursday that though he ultimately is responsible for his project, the biggest villain in the Sandy Street saga was Norristown and the way he said the inspection process failed him. Norristown Municipal Council President Bill Caldwell said it was Fazio's fault for constructing "a shoddy building."

Paula Peyton, 60, a retired Philadelphia schoolteacher, bought her unit after separating from her husband.

"For me, it was just a place to be so we could work on getting back together," she said.

It was also where social worker Beatriz Gomez-Raysor, 37, and her husband lived after their honeymoon.

"I liked it," she said. "It made you feel comfortable because it was new."

The best part, Gomez-Raysor said, was that "the neighbors made you feel like home."

Schofield, 37, became the building's first resident. "There were a lot of red flags in hindsight," he said.

A 2010 Keystone Municipal Services report that Norristown commissioned found problems beginning with Fazio's building-permit application. It said construction would cost about $17 per square foot. The standard industry practice, the review noted, was $94.

Inspectors pinpointed hazards years after the building was occupied, including load-bearing walls that were hollow, exposed wiring, and fire escape stairs made of wood.

Fazio said he hired David Nasatir, a lawyer, to represent him in the permitting process because he was "very good friends with Sean Kilkenny," the Norristown solicitor. Kilkenny said his friendship with Nasatir had no impact on the city's role in overseeing the project.

Caldwell conceded that Norristown was in transition, at the time, with top officials coming and going. The Keystone report noted a "major lack of communication, coordination and cooperation" among municipal departments, Norristown staff, and consultants working on the development.

In 2010, the building was condemned, and a judge told Norristown to fix the problems.

Caldwell said the municipality spent $3 million making those repairs. In 2012, the condemnation order was lifted and residents were allowed to go home.

Some did; Ellen Frank didn't.

"I rented an apartment and never moved back," she said. "I stopped paying my mortgage right then."

Problems continued this year. Over the winter, with only a handful of people living there, a fire sprinkler on the top floor exploded in an unheated unit. Water leaked down through units, finally collapsing part of the garage ceiling.

Though 770 Sandy is no longer home, the condo owners constantly are reminded that they still own a piece of it. As they bought or rented new places, they stopped paying their condo mortgages, which damaged their credit ratings and triggered foreclosure proceedings.

Frank, 45, said when she tried to lease a car, "I might as well have been a criminal. They look at your credit and they see that you haven't paid your mortgage."

Peyton stopped paying her mortgage in November after her son and his family left the condo. She found herself trapped: As soon as she stopped making payments, she applied for a deed in lieu of foreclosure, which means giving the bank the property to avoid foreclosure.

The bank denied her application, saying not enough time had elapsed. But when she applied again three months later, she was denied "due to outstanding issues with the building."

Eight Sandy Street condo owners have filed suit in Montgomery County. Their attorney, Charles Mandracchia, attended a hearing last week "to make the owners whole."

Norristown has made changes since the Sandy Street troubles, Caldwell said.

"The big piece of it is professionalizing our code enforcement and permitting process," he said.

The municipality hired a municipal code manager and contracted with a different firm to be its engineer.

But none of the individuals involved in the Sandy Street inspection and permitting process were disciplined. "Our feeling was that we would not be any further along if we found a scapegoat and blamed everything on them," Caldwell said.

Fazio was convicted in 2012 of theft charges in connection with a swap he made. He served a year at the Montgomery County Correctional Facility.

But he was cleared of criminal charges involving the building construction.

"The Borough of Norristown didn't have the proper inspectors to inspect the work all along the way," he said. "They kept approving all the work we were doing."

Fazio said he also blamed some of the people he hired to work on the project: "I paid them to do the work, and they didn't do it."

Despite $3 million that Caldwell said Norristown spent on making repairs, problems continue. Municipal officials are talking once again about condemning the building.

And so, the condominium owners wait.

"I can't get out from under it," Schofield said of his first home. "It just hangs around my neck like a giant weight."

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