Father-son homebuilders hit with foreclosure suits
(Crain's) — Two lenders have sued to collect almost $82 million from executives of family-owned suburban homebuilder Dartmoor Homes, a sign that the struggles of residential developers are far from over.
A venture managed by Brian Taylor, vice-president of Dartmoor, failed to pay off a $9.2-million loan secured by the site of a proposed single-family subdivision in Lake County when it came due last year, a lender alleges in a complaint filed Aug. 3 in Lake County Circuit Court. Mr. Taylor is named as a defendant in suit because the bank alleges he personally guaranteed the loan.
Just nine days later, Mr. Taylor's father, Dartmoor President Patrick A. Taylor, was hit with a suit by two affiliates of PNC Bank, which seek to recover a whopping $72.4 million on loans the affiliates say he guaranteed.
Neither Patrick nor Brian Taylor returned a message seeking comment.
Schaumburg-based Dartmoor is known for building upscale single-family homes and townhouses, primarily in the northwest suburbs, such as Yorkshire Woods, a 43-house development in Hoffman Estates. That project was nearly sold out at the end of 2006, two years after receiving zoning approval, a pace of about two homes a month.
But very few developers today are selling more than one home a month in the wake of the strife in the homebuilding market, according to Tracy Cross, president of residential consulting firm Tracy Cross & Associates in Schaumburg.
“It's pretty hard for any builder to maneuver through that malaise,” Mr. Cross says.
The suit against Patrick Taylor involves the former Timber Trails golf course in Western Springs, where Dartmoor planned to build 234 high-end residences on a 105-acre site. The company, which paid $45 million for the site in 2004, says in a description on its Web site that the project was “among the largest and most ambitious communities in Dartmoor history.”
But as early as November 2008, a Dartmoor venture failed to make payments on several loans tied to the property, at Wolf and Plainfield roads in the western suburb, according to a complaint filed Aug. 12 in Cook County Circuit Court.
The elder Mr. Taylor personally guaranteed a $93-million acquisition and development loan, a $15-million revolving construction loan and a $4-million letter of credit.
The loans, which matured in August 2009, were originally provided by MidAmerica Bank, a subsidiary of MAF Bancorp, which National City Bank bought in 2007.
After National City made a written demand for payment to Mr. Taylor, the bank filed to foreclose on the Western Springs property in May of last year. Pittsburgh-based PNC acquired National City at the end of 2008.
In March, the parties agreed to a judgment of foreclosure.
The PNC affiliates are seeking to collect about $72.4 million from the elder Mr. Taylor, or the difference between the balance due, which was $99.9 million, and the amount the affiliates bid for the property at a foreclosure auction.
Gary S. Caplan, a partner in the Chicago office of law firm Reed Smith LLP, which represents PNC, declines to comment. A spokesman for the bank did not respond to a message seeking comment.
In the second case, United Central Bank alleges that a $9.2-million loan to the younger Mr. Taylor on a 75-acre site in unincorporated Lake County went unpaid when it came due in September 2009.
Only 11 of the 110 homes planned for the Kildeer Estates subdivision have been built since the project was approved in early 2007. The site, at the northeast corner of Quentin Road and State Route 22, has since been annexed by the village of Hawthorn Woods.
The loan was issued by Mutual Bank, a Harvey-based lender that regulators shut down in July 2009 and sold to Texas-based United Central, and another bank. The amount owed is $9.9 million, according to the complaint.
Kevin Hunt of Chicago law firm Stahl Cohen Crowley Addis LLC, which represents United Central in the foreclosure case, had no comment. A spokesman for the bank did not return a call.
