On the House: Owners squeezed by lien law

As Ed Crotty was leaving his Skippack house for work a few mornings ago, he was greeted by a Montgomery County deputy sheriff bearing a most unwelcome gift:

A notice of a lien on his house, filed by Masco Corp.'s subsidiary B&F Insulation, for a gas fireplace, mantel, and surround (total cost about $1,800).

"There was no way I could have avoided him," Crotty said. "He was sitting in his car waiting for me."

Crotty is just one of the residents of Biltmore Estates to have a mechanics' lien placed on a house purchased from T.H. Properties (THP), the Harleysville builder that filed for Chapter 11 on April 30.

Laura Bearoff received her B&F lien notice the same day.

"Other than they can because the law dictates, I don't understand how they can do this," Bearoff said.

In January, B&F billed THP for Crotty's fireplace, an indication of how long the builder was in trouble before the bankruptcy filing.

Yet THP took a deposit from him just two weeks before the filing, said David Hall, who was supposed to have a house in Biltmore but instead had "to scramble to find a rental house" when the builder went south. What's worse, Hall said, he still "is not able to get out of our contract" or get his deposit back.

Even though he didn't get a house, Hall said, "it still infuriates me that our laws protect businesses, and not home buyers or owners."

Warren Pearce, vice president of operations for B&F Insulation and Synergy Insulation, responded, "It is unfortunate that T.H. Properties put its homeowners in this predicament. We are just trying to get paid for the work we performed on these properties."

Masco's subsidiaries are not the only materials supplier or subcontractor trying to put the squeeze on buyers who purchased from THP believing, wrongly as it turns out, that paying several hundred thousand dollars gave them clear title.

The plumbing contractor also has a lien against Crotty's house. But noting that the contractor's work was not up to snuff because the pressure gauge was faulty and no water ran when you turned on the tap, he cajoled the plumber into doing repairs.

If you're going to have a $12,000 lien placed on your house by the plumber, the plumbing should work.

Things like this were bound to happen in a state where the mechanics' lien law was changed to make going after homeowners easier.

At a hearing in U.S. Bankruptcy Court in Philadelphia just 48 hours before Crotty got his notice from B&F, Chief Judge Stephen Raslavich repeatedly noted that THP has no money for mechanics' liens. Getting the judge's reminders was Joseph LaFlamme, attorney for Reading Materials, which THP owes $5 million.

Raslavich also denied THP's motion for a $3 million loan from Continental Bank to complete and sell 39 houses in six developments. That sum would have included money to repay Hall and others owed returned deposits.

The failure of THP's effort indicated to some of the lawyers present that there is no exit strategy from Chapter 11.

Without one, the situation for Crotty, Bearoff, and others will only get worse.

 


Contact Alan J. Heavens at 215-85-2472 or aheavens@phillynews.com.

Inquirer real estate writer Alan J. Heavens is the author of "Remodeling on the Money" (Kaplan Publishing). His home-improvement columns appear Fridays in Home & Design.

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