NASSAU COUNTY, Fla. – Construction fraud is becoming alarmingly common in the greater Jacksonville area.
Dozens of people have come forward to the News4JAX I-TEAM in the last few weeks after their home builders abandoned their projects and left expensive homes unfinished.
Deputies in Nassau County are investigating The Reed Group Elite Homes for allegations of fraud and last month in St. Johns County, a Jacksonville homebuilder was arrested and accused of misappropriating more than $15 million that was supposed to be used for custom homes in Nocatee.
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Many homeowners are asking: what can we do to protect ourselves?
News4JAX asked Barry Ansbacher, the only attorney in North Florida who is board-certified in construction law, real estate law, and condominium and planned development law, about some of the red flags homeowners should be on the lookout for when it comes to choosing a general contractor or using a specific builder for a custom home.
“When you’re buying a home and lot combo or having somebody build, you really want to know who you’re dealing with. And this is really the essence of it. So you want to talk to people who have completed their homes. You often want to go beyond the names that the builder may suggest. If you look in the building department records, for any county where that builder is active, you should be able to find out what other homes that person permitted. You should also look to see if there is any claims on the person’s license with the Department of Business and Professional Regulation at MyFloridaLicense.com. And then even when a contractor appears reputable, you really want to have your own attorney review the documents you signed because there’s a lot of consumer protections in the construction laws,” Ansbacher said.
In some cases, there might not be anything you can do.
One homeowner News4JAX spoke to said she contracted with the Reed Group for her custom home build and paid them $53,000, but all she has to show for it now is a dirt lot.
Ansbacher said that even if you pay a builder for work that was never completed, if a bank is loaning you that money, you’re still obligated to pay the lender back.
“It’s really no different than if you buy a car that is a lemon that you finance, that you’re obligated to pay the lender back their money. It has nothing to do with what are you getting,” he said.
News4JAX also spoke with Christopher Cobb on Tuesday about how you can protect yourself from lien claims. He’s another local board-certified construction attorney who served on the State of Florida’s Construction Industry Licensing Board which governs contractors.
“The only way to protect themselves is to make sure they get a lien release from the subcontractor whose work is covered by the pay application. If the owner does not get that lien release, they can actually pay twice for the work. So it is very important as an owner of a build to make sure that you’re tracking who sends you notices to the owner and make sure you marry those up with the lien releases and do not issue payment to your contractor until you have all of the lien releases covering that pay period,” Cobb said.
A release of lien basically states that you’ve paid the subcontractor or contractor what is owed, they accept the payment in full, and they waive the right to put a lien on your property. You should file the release once work is finished and payments have been made.
News4JAX has tried to talk with the owners of both The Pineapple Corporation and The Reed Group Elite Homes by phone and in person. Our requests for comment went unanswered.