LOUISVILLE, KY (WAVE) - Falling home values can send ripple effects through the entire community. Now, some homeowners said a plan to revive their struggling subdivision is doing even more damage to their investment. So they called the WAVE 3 Troubleshooter Department to investigate how the developer can get away with it and I uncovered a debate that is raging in neighborhoods across the region.
Adam Cox thought deed restrictions on the look and size of homes in their subdivision protected them from cheaper homes being built next door until a new developer came in and changed the rules, without their knowledge or permission.
Cox used to look out his front window and see promise. Now Cox said he sees his property value coming down.
Vinyl now surrounds his all brick home in the Creek View Estates subdivision in Fern Creek. A developer named CVES, LLC bought 39 of 50 empty lots in Creek View Estates after the original builder went bankrupt, then turned around and sold the lots to Dominion Homes. Dominion specializes in entry level homes with smaller floor plans and vinyl siding.
"They're vultures," Cox said. "That's what they are. They saw an opportunity to make money. That's why they are here. If we wanted to have cheaper homes back here we would have moved somewhere that was a 3 sided vinyl neighborhood."
Cox thought his neighborhood was protected from homes like that by Creek View Estates "Declaration of Covenants, Conditions and Restrictions." It's a legally binding set of rules that specifically lays out what homes in the subdivision are supposed to look like.
When Cox purchased his all brick home for $224,000, vinyl was strictly prohibited. Then the builder went belly up and CVES moved in. Without consulting neighbors, CVES changed the restrictions to fit the type of homes Dominion builds, which start at $70,000 less than Cox paid.
So how did CVES do it? We discovered most covenants are controlled by the developers until subdivisions are complete. In the case of Creek View Estates, CVES can change building restrictions up to 90 days after the last home is sold. Bill Bardenwerper, an attorney for CVES, said that's a good thing.
"There's no possible way anyone in the subdivision can say they are better off living in a ghost town," Bardenwerper said.
Bardenwerper helped form CVES to buy back the remaining lots in the subdivision after the bank foreclosed. While he admits the Dominion deal is a money maker for him, he said it's helping existing homeowners too by cleaning up a subdivision that had fallen into disrepair and building up a neighborhood that might otherwise sit unfinished.
When pressed on why CVES didn't wait for a builder that was interested in building to the existing covenants and restrictions, Bardenwerper said, "there wasn't anybody."
According to Bardenwerper, the housing crisis brought high end home construction to a virtual standstill, and not just in Creek View Estates. Developers changed the deed restrictions to allow cheaper homes in the Brookfield subdivision in Eastwood. Other unfinished subdivisions, like Signature Point in Middletown, face uncertain futures too.
Bardenwerper said the lack of development is a property value killer. In Creek View Estates, prices dropped below $200,000 before Dominon arrived. Bardenwerper said that's less than some of the homes Dominion plans to build in Creek View Estates. But even Dominion's top end falls tens of thousands short of what Cox paid.
"The more plastic homes that get put up," Cox said, "the further my property values go down."
Monday, May 20 2013 6:10 PM EDT2013-05-20 22:10:07 GMT
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