Many families out of homes, large sums of money after builder files for bankruptcy

Numerous people have filed suit against Bella Vita Custom Homes stating they didn't complete the work even after money was paid

Construction on Joel and Tracey Lackovich's home by Bella Vita on their lot in Spanish Oaks. (Courtesy: Lackovich Family)
Construction on Joel and Tracey Lackovich's home by Bella Vita on their lot in Spanish Oaks. (Courtesy: Lackovich Family)

Highlights


AUSTIN (KXAN) -- As the housing market continues to flourish in Central Texas, the number of families willing to spend hundreds of thousands of dollars to custom-build their dream home is rising.

Joel and Tracey Lackovich had been saving for years to build their dream home for their growing family of six. “We’ve been saving up for this,” the Lackovichs' said. “We were putting everything—our hard-earned money and savings—into this. This was a very calculated move for us financially.”

What was supposed to become their dream quickly became the couple's personal nightmare of an experience when they signed a contract with Bella Vita Custom Homes, LLC to build their home in the private, gated community of Spanish Oaks in Lakeway. As KXAN started looking into the couple's story, it became apparent that their experience wasn't an isolated incident.

The Lackovich's Story

The couple began the process of planning to build their dream home nearly four years ago. In October 2014, Joel and Tracey met with Bella Vita Custom Homes, LLC at their then-offices inside the Hill Country Galleria shopping center. Shortly thereafter, they began contract negotiations with the custom home builder and on April 3, 2015, the contract for a $1 million dollar home was signed and official.

“They insisted that 10 percent be given up-front of the total construction loan ($958,878),” explained the Lackovichs'. For the couple, that deposit totaled $95,887, as a soft cost draw. So, they wrote a check and anxiously awaited progress on their property.

The whole Lackovich family. (Courtesy: Lackovich Family)
The whole Lackovich family. (Courtesy: Lackovich Family)

From the beginning, the couple say the work was slow to start on their lot. “There was always an excuse and a reason to delay,” said Tracey.

“I’d go out there every single day. I’d go out to the model home, going out to the Galleria office, going out to our lot. It was like a triangle of nothing happening,” explained Joel. “I would take photos every day."

All the while, Bella Vita was collecting money from the construction loan. The couple says the company even tried to draw funds from the bank and have them sign off on it without completing the work for which they were requesting funds. “You’re supposed to be paying for things as you’re drawing money, and it’s not supposed to be paid for until it’s done,” said Tracey. Lenders are typically supposed to check on the progress of work before payment is made, but in this case, it appears that didn't happen.

"We gave Bella Vita $300,000 and we didn’t have $300,000 worth of work done."

It wasn’t until the couple was sued by a subcontractor, alongside Bella Vita Custom Homes as defendants, for failing to make payments for services provided on their home, that the Lackovichs' say they realized the extent of the issue. The Lackovichs' say the company was taking their money, but failed to pay their subcontractors.

“Things that we've paid for—that we paid Bella Vita to pay—they never paid,” the couple said. “We gave Bella Vita $300,000 and we didn’t have $300,000 worth of work done."

The Lackovichs' say that dollar amount doesn’t take into consideration the years of rent they’ve had to pay because their home remains unfinished, along with their attorney’s fees and damages to their custom home build that failed to meet requirements established by the Spanish Oaks community.

In some cases, the couple says they paid twice on products to avoid being sued again. “We had to pay twice for this door because Bella Vita took the draw for it. It’s a $4,000 door. They took $2,000 [a deposit] and never paid for it,” said Tracey, crying. It’s the front door Tracey customized with the initials of every member of their family on it. When all was said and done, the couple ended up paying $6,000 for it, in all.

By April 2016—a year after construction began on their custom home—the Lackovichs' fired Bella Vita Custom Homes, citing breach of contract and then sued the company and its CEO, Steven "Andy" Clem.

Timeline of Events

Bella Vita Custom Homes: A Background in Business

Bella Vita Custom Homes, LLC started its business in 2010 in the Dallas-Fort Worth area. Shortly thereafter, the company began building in luxury neighborhoods in the area of Austin/Bee Cave. Several homebuyers say they soon realized that the company—which required substantial deposits down in order to begin the building process—was making large bank withdrawals from their customers’ accounts without completing work and in some cases, failing to pay subcontractors.

Looking back, the Lackovichs' say they did everything they knew to protect themselves and their investment, but say they still felt the impact.

“We bought our lot and we waited three years,” said Tracey. “We were very meticulous to find that right builder who had the references, who had the website, who had the history, who had the articles written and published about the quality of their homes.”

As our KXAN investigation revealed, Joel and Tracey Lackovich are not alone in their experience with the custom home building company.

In fact, in Travis County alone, Bella Vita Custom Homes has been sued for more than $1 million. As of January 2017, courts have awarded nearly $575,000 in judgments that have gone unpaid by the company. It doesn’t stop there. KXAN also discovered that so far more than 40 homebuyers, investors and subcontractors have filed lawsuits against Bella Vita Custom Homes, LLC and its executives, father and son, Mike and Steven “Andy” Clem. The lawsuits, as well as a stack of legal demand letters, come not only from the Spanish Oaks neighborhood but also from those who say they’ve had similar troubles with other Bella Vita projects in the Austin and Dallas-Fort Worth areas.

Every member of a nine-person panel discussion held at KXAN studios—made up of hopeful homebuyers, investors, and subcontractors—said they lost money to Bella Vita Custom Homes.

Nine individuals who said they also had issues with Bella Vita Custom Homes. (KXAN Photo)
Nine individuals who said they also had issues with Bella Vita Custom Homes. (KXAN Photo)

Lisa Brankin’s story is one of an investor.

“When it started we were really excited because it seemed like such a win-win,” Brankin explained of her Spanish Oaks home. “They were supposed to build us a house at ‘their cost’ and then we signed a profit agreement with them that basically said they would build us a house at a set price and once the house was finished, we would split any profits 50/50.”

Brankin says that’s not how it ended. “Now, we have a house that’s sitting, not quite totally framed, and we’re looking at having to undo a bunch of things to fix it because it’s been sitting in the weather for five or six months.”

While Brankin has not filed suit against Bella Vita, she says it’s with good reason. “It not only keeps costing money with attorneys, [and] our house isn't finished. So now we have to pre-qualify for another loan. We have to get another $330,000 to finish the house.”

Subcontractor Chris Staff, with CSTAFF Construction based in Dripping Springs, says at the end of 2014, he noticed Bella Vita developed a pattern of making late payments. "We started to see signs of payments being later by days and then weeks, and then one payment a month instead of two payments a month. When we'd call for payment or issues, it seems like they'd always have an excuse for something, or 'hey, do this job for us and we're going to get the draw to get the pay,'" he said.

“I was strung along for almost two years," Staff continued. "All the flags went up when we started to hear the stories of homeowners not getting their bills paid."

The small business owner says he gets emotional when he thinks about his salary last year. “I think I've worked an entire year to make up for the two years that they took from us. I didn't leave my employees unpaid. I took the loss. I'm the company owner. But, we made it… I just want to see justice. They need to pay it all back.”

But, paying it back is likely not in the company’s plans.

Bella Vita Files for Bankruptcy

On Dec. 14, 2016, nearly two years after the Lackovichs' started doing business with the company, with nothing but a partial framing job to show for it on their property, Bella Vita Custom Homes filed for bankruptcy.

The Lackovichs' were determined to get answers about where their money went after the company failed to appear at their civil hearing.

“Collecting the money wasn't going to be our focus anymore. It had to switch to making sure that justice was done. These people do not belong on the streets roaming free, freely spending the cash that they've stolen from all of us,” said Tracey.

Lackovich home as of January 2017. (KXAN Photo/Paul Shelton)
Lackovich home as of January 2017. (KXAN Photo/Paul Shelton)

Bella Vita Custom Homes has since closed up shop in the Austin area. They did not answer the door at their last-listed addresses in town. KXAN tried to contact the executives and their attorney, who would only tell us the Clems' would not grant our request for an interview.

On Jan. 18, 2017, Mike and Andy Clem were forced to speak, by law. On this date, the Clems' were forced to answer questions before creditors and the U.S. Trustee’s Office at the first meeting of creditors in Bella Vita Custom Homes’ bankruptcy case at the federal courthouse in Dallas.

While cameras were not allowed inside the courthouse, KXAN was at the meeting. Through a public information open records request, KXAN obtained an audio recording of the bankruptcy meeting.

When addressing creditors, CEO Andy Clem said the overhead costs were too great. “The project managers, the interior designers, [and] the architects we employed, their expenses were too high and they spread across all the jobs. So, they started going negative,” said Clem. “On top of that, we had a severe period of price increases from our subs [subcontractors]. So a lot of our jobs were way over budget.”

U.S. Trustee Robert Yaquinto said total liabilities for the company are listed at more than $9 million. Prior to the filing, Andy and Mike Clem paid themselves a salary. During January’s bankruptcy meeting, Andy Clem said he was paid $132,000 annually and Mike Clem, was paid $120,000. Also during the meeting, Andy Clem said that around the time the company filed for bankruptcy, he began doing contract work in the Dallas area with concrete and construction consultation sales.

KXAN tried to ask Mike and Andy Clem our own questions immediately following the meeting, but neither of them wanted to talk.

The Lackovichs' attended the meeting and say it was more than a disappointment and few answers were provided as to what happened to their money.

“They blamed everyone but themselves,” said Tracey. “What about the homeowners? What about the contracts? There are people—families—that you have destroyed.”

The Lackovich family continues to pray that they’ll find out where their money went, but say they realize they’ll likely never get their money back from the builder. The family has since moved into a temporary home as they continue paying to finish their dream home with a new builder.

“We have to be content with a dream having turned into a nightmare,” they said. In the meantime, the couple says they’re focusing on their family.

“If I help one person who would watch this and be protected from something like this from happening to them, it's worth it,” Tracey said, crying. “The good guys always win. They do. We will.”

Consumer Protection and Oversight

Following the bankruptcy meeting in Dallas, the Lackovichs' told KXAN they believe homeowners need to be better protected in Texas.

“To have wasted three years of my life, and be in the hole that we're in and try to climb out, I think after today, we realized that our system is broken. The homeowners are not protected,” said Tracey.

In 2003, Texas state lawmakers created the Residential Construction Commission to oversee the homebuilding industry. But, the agency was dissolved shortly after it started. In a final review of the commission, it was decided that the then-regulation of the residential construction industry was "fundamentally flawed and [did] more harm than good."

In addition, according to the report,

"The Texas Residential Construction Commission was never meant to be a true regulatory agency with a clear mission of protecting the public. It has elements of a regulatory agency in its registration of homebuilders, but this program is not designed to ensure that only qualified persons can enter the field – the way true regulatory agencies work – and so does not work to prevent problems from occurring."

Tips on how to protect yourself if you want to buy or build a home in Texas:

  • Know what you want and how much you want to pay for it beforehand
  • If you want to make any changes to your home or its design, do so in the planning process. It becomes more expensive to change things after building has begun.
  • Check references and licenses -- in person and online reviews
  • Sign a contract but first, get a reputable attorney to thoroughly review your contract before signing it
  • Visit your home site frequently and know the people working on your home

The Attorney General of Texas Ken Paxton also offers consumer protection recommendations for the home buying process online. For more information about how to file a consumer complaint with the Texas Attorney General’s Office, click here.

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