Multiple families left with liens, half-finished homes after builder files bankruptcy

Eight families were left with a mountain of debt and no home to show for it after a local home-builder they hired took tens-of-thousands of dollars from them – then declared bankruptcy.

Joseph Knowles is one of them. He and his wife struggled to find a house in this red-hot real estate market, so they hired J&R Homes to build a new one in June of 2021

"Everything was going along well earlier this year and this frame went up in about February and after that we didn’t see any updates," Knowles told WRAL News about the construction on his home.

After asking repeatedly about the delays, the Knowles finally sat down with J&R Homes representatives.

"They said they just wanted to tell us everything is going fine, the project was going to be pushed out a little longer into September but they were 100% committed to completing this at the agreed upon price," Knowles said.

That was mid-April. A few days later, the Knowles first child arrived early.

"Three-and-a-half weeks early," Knowles said. "He spent about a week in the NICU."

With his wife recovering and baby Christian in intensive care, Knowles got a lien notice.

"The works been done, which is great, but the money has been taken out of the loan and not paid to a subcontractor who did this work," Knowles said.

J&R Homes took nearly $44,000 out of the Knowles construction loan for the cost of framing the house. That work was done, but the subcontractor who actually did the work, didn’t get paid. So, the subcontractor put a lien on the Knowles property.

"So the big question we’re trying to figure out is where did all that money go?" Knowles was left asking.

Then, a few weeks later, J&R Homes filed for bankruptcy.

"Where does that leave us?" Knowles again wondered.

The Trustee and Administrator in the J&R Homes bankruptcy case will comb through the company’s finances and transactions to see if there is any money that can be returned to Knowles and other J&R Homes customers.

5 On Your Side did some digging and found J&R Homes CEO Daniel Brody is connected to five other LLC’s in North Carolina. While there are perfectly legitimate reasons to do that, two of the LLC’s were opened just one month before J&R Homes filed for bankruptcy.

We tried to track Brody down to ask why, but no one was at the J&R Homes office and our calls haven’t been returned.

"We thought we were doing something relatively safe," Knowles told us. "I’ve never heard of building a home going like this."

The Knowles are now left with a $44,000 dollar bill they might have to pay a second time, no builder to finish their home, and they’re at risk of losing the low mortgage rate they locked in a year ago.

"We’re pretty much all in on this one and that’s the sad part," Knowles said. "If we can’t get this completed, how many years is this going to set us back?"

Daniel Brody has surrendered his contractors license, meaning he can not perform construction projects over $30,000. The District Attorney tells 5 On Your Side the Lee County Sheriff’s Office is also investigating complaints against J&R Homes.

If you are considering building a home, a measure you can take to protect yourself is to ask for lien waivers to be included in your contract. That requires sub-contractors to confirm they’ve been paid before the main contractor can take any more money out of the construction loan.

That may not have prevented what happened to the Knowles, but it’s a layer of security that can potentially catch a problem with a contractor before more money is committed to the project.