Indianapolis Home Builder Gets Homeowners Slapped with Mechanic's Liens

Indianapolis Real Estate News, Indianapolis New Homes

If you are under contract with Davis Homes in the Indianapolis area, walk no run away from your contract before it ends up costing you thousands of extra dollars.  Davis Homes is getting its new homeowners slapped with liens on their brand new homes that Davis built and failed to pay all of their contractors.  I have bogged about some nasty rumors about Davis Homes and also a bone head marketing move regarding their website, but nothing like this.

Davis Homes appears to be on the verge on disaster and they are taking unwitting homeowners along with them.  I have spoken with several homeowners in the Hamilton County area that have been served with these liens and have court documents to support their claims.  The liens that have been recorded at the Hamilton County Courthouse that involve homeowners are coming from a contractor of theirs “Creative Touch Interiors” who allege that they provided “materials, labor, services, and/or equipment for improvements to the property” in the last 60 days and have never been paid.  Some homeowners have received a letter from Brad Davis, the president of Davis Homes, stating that this is a mistake and the lien has or will be paid.  However, at this point this is just lip service and no evidence has emerged that these liens have been paid. 

Although the homeowners I have spoken to seem to think this is a widespread problem involving dozens of homeowners, I was able to find 3 liens that involved homeowners as well as Davis Homes.  While I am certainly not an expert at researching court documents, I was able to find 3 separate communities where homeowners are being served with liens: Countryside in Westfield, Lakes at Towne Road in Carmel, and Sedona Woods in Fishers.  I have included a copy of one of the liens that has been filed; I have blurred out the homeowner’s name because although this is a public record I wanted to respect their privacy.  Here is one lien that has been filed naming Davis Homes and the homeowner making a claim for more than $9,000:

What exactly is a lien?

According the Indiana Department of Financial Institutions:

“A mechanic's lien is a claim against real estate which the person who asserts the claim says was benefited by improvements he or she made.  This person will be referred to as the "lien claimant."  By statute, the lien claimant must follow specific requirements in order to secure a valid mechanic's lien against your real estate.  Unless he or she does so, the lien may not be enforceable.”

I am under contract with Davis Homes, should I walk away from my deposit?

This is a hard one to answer, because no one really knows what is going on behind the scenes.  If your earnest money deposit is only $500, you might want to consider cutting your losses and moving on with your life.  If you are intent on closing on your Davis Home, I would highly recommend you consult an attorney before closing on your home. 

Doesn’t Title Insurance Cover Mechanic Liens?

Most of the time, no.  Title insurance really only covers liens if the title company made a mistake and missed a lien while they were searching the property to insure the title was clear.  In these cases, the mechanic’s liens were filed after the closing date so the title insurance would not cover them.  This is why at time of closing the seller, Davis Homes, is required to sign an affidavit stating that they do not owe anyone any money on this property and that there are no liens they know about on the property.

Again consult a qualified attorney, but there are a few things you can do to improve your odds if you do choose to close on your Davis home after reading this.  You can make sure that the builder signed affidavit is signed and dated on the actual closing date.  You also need to go over the title insurance with a fine tooth comb and also ask them to date it the day of closing.  Sometimes the title insurance is dated for weeks before the close of escrow, affectively not insuring any liens from that date forward.  In addition, most title companies put a slew of exclusions in the title policy that protect them even further.  However, just by asking you can get most of those exclusions removed which should give you a little extra protection.

What is the Future of Davis Homes?

I guess no one but a few people actually know the answer to this one, but future seems quite bleak for Davis Homes.  While I was at the Hamilton County Courthouse, I came across another lien that was filed on the second section of one of their Noblesville communities, Brighton Knoll, for the hefty sum of $191,000.  Here is copy of the lien:

I have a lien filed against my house what do I do?

First and foremost, consult an attorney.  In addition, if the problem is as widespread as some say I will create a forum that will serve as a hub for homeowners in the same situation.  I will be inviting anyone and everyone to participate, including homeowners, title companies, and lawyers.  Until this is up, please post comments questions and concerns here. 
 

Date: 2008-04-28 10:14:07
Views: 3438

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