In The News

Couple Sues Developer Over Flipping, Says It's Ghost Town

By Kimberly Miller Palm Beach Post

7:15 a.m. EDT, April 27, 2010

Newly wed and planning for children, Jonathon and Brandy Miller thought they were buying into Mayberry.

Instead, the Boynton Beach couple say they live in a development ravaged by flippers.

First a ghost town of vacant properties, they complain their community of three-story town homes is now overrun by "irreverent transients" who park erratically, leave trashcans perpetually curbside, throw loud parties, install unsightly and unauthorized satellite dishes, and fail to pick up after free-roaming dogs.

They blame developer K. Hovnanian for letting it happen.

And the Millers, who bought pre-construction in 2004, want their money back.

In a lawsuit filed this month in Palm Beach County Circuit Court, the Millers say sales agents told them the new Firenze development on Congress Avenue was going to be a "warm," family-friendly neighborhood of homeowners.

At the same time, however, agents were selling multiple properties to individual investors.

Also, despite contractual language to discourage flipping, the lawsuit claims the Tuscan-style Firenze homes were bought and sold unchecked during the real estate "go-go" days.

As the boom went bust, the couple claims investors scrambled to find buyers for the vacant homes. When that failed, they rented, or walked away.

"We just feel like we've been wronged," said Jonathon Miller, 32, who paid $359,326 for the home. "We were misled when we purchased it and we finally just got fed up and had to take some sort of action to address it."

Miller is an attorney with Wicker, Smith, O'Hara, McCoy & Ford in Fort Lauderdale, the same firm handling his case. His wife is the executive director of a non-profit group.

In 2006, the couple moved into their new 1,890-square-foot home.

Just days later, the lawsuit claims, their "unbeknownst and unthinkable nightmare began."

Transient neighbors shuffle in and out. The exercise room was burglarized. The clubhouse remains locked for fear of vandalism. Landscaping deteriorated.

Mark Hodges, Southeast Florida division president for New Jersey-based K. Hovnanian, said the lawsuit is unfounded.

"K. Hovnanian has in this case, and in all matters relating to contracts into which we enter, acted in full compliance with those contracts and within the laws of the state of Florida," he said. "Our integrity is well-established and our commitment to fair dealings in all our pursuits is uncompromising."

The 230-home Firenze development is part of a larger community called Renaissance Commons near the Boynton Beach Mall.

The community was originally developed and marketed by Illinois-based Town & Country Homes, which was acquired by Hovnanian Enterprises, Inc., in 2005.

Real estate analyst Jack McCabe, of McCabe Research and Consulting in Deerfield, said he's never heard of a lawsuit similar to the one brought by the Millers. He's skeptical of its merit.

"There are an awful lot of people grasping at straws, trying to avoid financial ruin for poor real estate decisions made during the boom," McCabe said.

But Attorney Eric Glazer of Glazer & Associates, disagrees, saying the Miller's might have a case if community-governing contracts were broken.

Glazer agreed the suit is unusual.

"That doesn't mean it's not a good cause of action," he said.

According to the lawsuit, Firenze sales contracts forbid pre-construction buyers to sell homes before closing on the title. It also says the buyer's intent must be to retain ownership of the home for a period of at least 18 months.

But the Millers say many buyers never intended to keep the homes for 18 months.

An executive of the property management firm hired to oversee Firenze bought a home in the community and listed it for sale just eight days later.

The homeowner's association, while still under rule by the developer, approved the sale of a home for $520,000, which had just been purchased 57 days earlier for $386,985. The property was foreclosed on in 2008.

In fact, the lawsuit claims of 157 lots that closed in 2005 and 2006, 50 percent were listed for resale within the first 18 months.

By 2007, K. Hovnanian was advertising the "Deal of the Century" sale, trying to get rid of deeply discounted homes at sites nationwide, including Firenze.