Kara banruptcy “has left creditors and clients in a quandry”

From the Suburban:

Builder’s bankruptcy raises questions in O.B.
BY MARLENE CANTY

Kara Homes, the developer of two township communities, has left creditors and clients in a quandary as to whether the builder will meet its contractual obligations.

The East Brunswick-based builder with projects all over New Jersey but most notably in Monmouth and Ocean counties, filed for bankruptcy on Oct. 5.

The move came in the midst of a housing slump that left the builder scrambling to find buyers for its developments all over the state.

Locally, after years of difficulties with the two Old Bridge projects, the question being asked by observers, customers, residents and town officials alike is: Are Kara’s difficulties isolated and the result of mismanagement and bad luck, or the beginning of a trend that will be repeated as the housing market bottoms out.
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“What concerns us most in all this are the individual homeowners, many of whom have their entire life savings tied up in deposits on the units,” Phillips said.

Will those home buyers get their money back?

The law states that if a home buyer’s deposit is in an escrow account, the buyer is entitled to get his money back, but if the homeowner has already released the money from escrow to enable the builder to construct the home, the situation could become tricky. A possible solution might include allowing the buyer to purchase the property at a discount and have another builder complete the house.
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At Bridgepointe, an Old Bridge development Kara took over from another developer three years ago, Kara has completed construction of the units and amenities like the clubhouse and the pool, Tucciarone said. He did not comment about whether sidewalks and landscaping had been completed at Bridgepointe, whose homeowners association has been working with Kara to have several issues resolved over the past year.

Tucciarone believes Kara’s difficulties are rooted in a downturn in the housing market, a market he describes as “super-saturated” with upscale homes.

“I think we overbuilt the market,” Tucciarone said. “Once you out-build the market, there’s no one left to buy the homes. It’s not just Kara, I think we overbuilt the state.”

Tucciarone, who says Old Bridge is a wonderful place to live and that his statement is proved by how many people move to the town each year, thinks that Kara and other developers need to begin scaling down and building more lower-priced “starter” homes for first-time buyers and working-class pocket-books.