In the last episode of this saga, we learned that Neumann Homes is planning to file Chapter 11 bankruptcy. As of yesterday, Tuesday October 30th, Neumann Homes had not filed. No one has been able to explain why they haven’t filed with the court yet.
According to reliable sources, Kenneth Neumann, the CEO of Neumann Homes, is planning to force the home buyers to purchase the Neumann Homes. With reports of shoddy building of the houses, many families are opting to forgo purchasing the Neumann houses and are attempting to receive their earnest money back.
In many cases, Neumann Homes had violated the purchase contract by not finishing the homes within 150 days of the issuance of the building permits (paragraph 12). The contract states in paragraph 21 sub paragraph A:
- When either party feels a dispute has arisen, that party shall notify the other party in writing of the nature and details of the dispute (“Dispute Notice”). Within fifteen (15) days after such Dispute Notice, a meeting shall be held between the parties to begin a good faith attempt to negotiate a resolution. During this procedure the parties will communicate directly with each other in an effort to reach an agreement that serves the interests of both parties.
All of the real estate lawyers I’ve asked, if either party does not respond to the Dispute Notice, the requirement of Mediation and Mandatory Binding Arbitration is no longer binding. The most that Neumann Homes is likely to be able to do is to keep the earnest money but even that is questionable.