Scott and Marie Gilfert fell in love with the Parker community of Idyllwilde after visiting in April.

They agreed to pay about $489,000 for a new Village Homes residence, signing a deal that hinged on the sale of their current house. The company explained that the $8,000 they put down in earnest money was refundable.

But the move has not gone according to plan.

Village Homes filed for bankruptcy protection last month, blaming the weak market and the credit crisis. And the housing sector has slumped, making it harder for the Gilferts to unload their place.

"Now I'm stuck between a rock and a hard place," said Scott Gilfert, who is 37 and works as a regional sales director at a small shipping company.

Village Homes has been unable to refund the $8,000 now that it is in bankruptcy court, and Gilfert said that he does not want to walk away without the money. At the same time, he said the idea of selling his house for an unacceptably low sum and buying a new one from a bankrupt builder is not appealing either.

The Gilferts are among the Village Homes customers who are in an awkward position as the home builder proceeds in bankruptcy court. Some people may seek refunds. Others are in limbo for a different reason. They do not want any of their deposit money back. They want to move in.

"I've watched it being built," said Carol Ackley, a 69-year-old retired accountant. "I've taken rolls of film. I've visited once a week. If they let me I'd probably put a mat on the floor and move in."

When Village Homes filed Chapter 11 on Nov. 6, her new home in Westminster was three weeks from the finish line. Ackley had planned to close on the house this week, just in time to host her younger sister who is gravely ill and coming to Denver any day for treatment.

"I told her she could stay at my home," Ackley said. "Well, I don't have one. I'm very disappointed."

Another customer, Carolyn Baker, sold her house in Castle Pines North in June and prepared to make the leap to a new $330,000 townhome in the same neighborhood. But she has been bouncing around for months, taking trips, house-sitting for friends and now rooming with her son in his apartment.

"I'm not thrilled about it," she said.

Baker, 62, said construction was delayed as Village Homes encountered economic problems. Finally, the home is nearly finished, in need of only appliances and electrical work. Baker said that she hopes to have Christmas with her family in the new house.

Village Homes struggled to secure financing from lenders in the months before filing bankruptcy. In some cases, the company could not get funding until it sold a certain percentage of townhome units, according to Matt Osborn, son of company founder John Osborn.

The company now is seeking approval to access about $2 million in cash over the coming months and to continue closing on new- home sales, Osborn said. Village Homes, which has built more than 10,000 homes in Colorado since it was founded in 1984, hopes to resolve those issues "fairly quickly," he said.

"It has been frustrating I know, for them and for us, to continue delaying these houses," he said. "We want to get back to operating under normalized business conditions, but we haven't been able to get there yet."

Work on homes under construction and the building of new houses has been frozen since the Chapter 11 filing and will be on hold until the company arranges financing necessary to pay contractors, according to the company's lawyer Garry Appel.

"We're working hard to line up those funds," said Appel, adding that the company cannot use the $2 million in cash for construction costs.

Osborn said it could take at least a couple of weeks.

Even though they are upset, some buyers are understanding of the situation. Ackley said she "is standing by the company" and has faith in its ability to emerge from Chapter 11. Ackley added that Osborn has called at least a couple of times to provide updates.

"I was very satisfied with the deal they made, the product, the quality," said Ackley, who bought a $313,000 home and is staying with a friend in Aurora. "I want to live out my years in this home."

Court documents list more than 40 customers with deposits totaling roughly $430,000. Those who want to close on new homes should be able to before long, but customers such as the Gilferts who want their refunds back may have to wait awhile as the company restructures and works out a plan, Osborn said.

The lawyer, Appel, said the company is "hopeful" it will be able to repay people who want their earnest money back.

"It's a very important issue," he said, "and we're doing everything we can to work through it."

The place the Gilferts picked out needs only appliances and window screens. But Scott Gilfert said he cannot sell the house in Parker where he lives with his wife and three children. He put it on the market for $700,000 and has lowered the price to $649,000.

Even if he were to sell the house for a decent amount, he would be reluctant to close on the new one, partly because of concerns about the warranty.

Osborn said that Village Homes "has every intention of fulfilling those obligations" and is in talks with an outside company that would back up the warranties should the metro region's largest privately held builder fail. Still, the company hopes to restructure and emerge from the process.

Customers, for now, may need to be patient.

"I guess it's a sit-and-wait game," Gilfert said.

Back to Top