No-Charity Case: Royce Builders Education in Bankruptcy

Regular Swamplot readers will remember all the fun surrounding the collapse and shutdown of Royce Builders last year. What’s happened since? Chapter 7 bankruptcy! Plus now, says the Chronicle‘s Nancy Sarnoff:

Wisenbaker Builder Services, Suncoast Post Tension, Builders Mechanical and Luxury Baths by Arrow are collectively seeking to recover more than $1.1 million from the builder, according to the petition filed last month in U.S. Bankruptcy Court for the Southern District of Texas.

Thousands of home- owners could also have claims against the company.

Attorney David Jones, who is representing Royce in the bankruptcy, is compiling names of potential creditors that lists more than 12,000 people.

“Homeowners are the biggest portion,” said Jones, a partner with Porter & Hedges.

Oh, but there’s more! In a separate legal action, an educational charity that Royce owner John Speer used to promote his businesses and solicit contributions from customers is claiming that Royce failed to deliver funds raised on its behalf. A struggling charity that renamed itself the Royce Homes Foundation for Youth in 2003 — after Speer apparently promised to deliver several hundred thousand dollars a year in support — says Royce still owes it about $400K:


Beginning in 2007, the Royce Defendants failed to make their yearly contributions to the Plaintiff, and also failed to render an accounting and to turnover funds derived from the 2007 golf tournament, the 2007 sporting clays shooting tournament, and the 2008 golf tournament (the 2008 sporting clays tournament was cancelled due to the Royce Defendants going out of business). On information and belief, Defendant Speer utilized those funds to help prop up his ailing business enterprises, Defendant Royce Homes and/or Defendant Royce Builders, which were forced to go out of business in the Fall of 2008 after being challenged by numerous customers and vendors over questionable real estate transactions and improper construction of newly built homes.

The missing money was meant to go toward scholarships promised to at least 60 college students, according to Fox 26 reporter Isiah Carey.

Photo of former Royce Builders offices at 7850 N. Sam Houston Pkwy. West: Stewart Title

20 Comment

  • Here we go again!

  • Still the scum of the Earth! Feels like Karma!

  • Yeah, taking back scholarship money really seals the deal on being a scumbag.

  • Could not happen to a nicer set of people — hope they go down in flames.

    It is a shame the State of Texas has no protection for consumers who try to build a dream home and have to deal with these sort of individuals.

    Would love to be included in any kind of lawsuit against these people.

  • Hi All,

    I am looking at this bank-owned foreclosure (yr 2006, 2515sqft, $175k, 99/westpark) from Royce. Never lived in, looks nice, backyard lake, etc but no warranties. I understand that the builder went bankrupt for a variety of reasons but do you suggest taking the risk without the warranty? Have they had quality issues in the past? Will greatly appreciate advice.

    23722 Parkwater Bridge Ln Richmond, TX 77407


  • I would not risk purchasing a home without a warranty. Through past experience Royce has more often than not had “quality” issues. Even when the going was good it was like pulling teeth to get them to live up to their so-called warranty. There are many more feasible, reputable builders available and thriving in the Houston area. Take heed from the “Money Pit”.

  • Not only have the created wastelands of communities, not to mention cheating god knows how many out of hundreds of thousands of dollars, but the missing scholarship money is the real icing on the failed cake.

  • Raza, I would have the most critical items inspected–slab, framing, elec & plbg, etc. If they pass, and the price is right, I would do it. Most of the other items are wear & tear type stuff, and you would be replacing, repainting, etc over time. What you DON’T want is your slab failing on you, or finding out the elec panel has been stripped clean.

    Good luck!

  • I agree with SH snooty here.

    Essentially what you are buying here is an existing home. No different than an old ranch home from 30-40 years ago.

    The slab and structural components are critical to get inspected. Paying an electrician and plumber to inspect the other systems in the house would be worth it. I guess throw in an A/C guy also to check that system and duct work. The cost for all these inspections are still a bargain for the price your getting the home at. The piece of mind would be worth it.

    The existing Royce homes are a bargain in a buyer’s market of already lower priced homes.

  • Thank you all for the helpful advice. My check list now includes:
    1. Check for any liens
    2. Standard inspection
    3. Additional inspection – plumbing, electrical, roof, foundation, etc

    Since there is no warranty, do you suggest I get a third party structural warranty (if something like that exists) for this 2006 home? Or would a thorough inspection suffice?

    I found it a bit strange that this foreclosed home had a $40k jump in appraisal value in 2009.

    2006 – $25,000 (house under construction)
    2007 – $156,460 (used as model home)
    2008 – $155,810 (Royce goes under)
    2009 – $194,370 (house on market)

  • Raza,

    Since you are just past May 31, you won’t be able to reduce the value for property taxes this year through HCAD.

    You’ll have to protest in 2010. I’m guessing you’ll be able to reduce it a bit.

    I don’t think you’ll get new warranties unless you have work done. Then the warranty would only cover that work.

    A good inspection would prepare you for future repairs are decide not to buy at all.

  • I have a Royce Home in Fort Worth. I purchased the house and close in June of 2008. I will tell you it was more than disappointing that this subdivision lost its main builder 2 months after I moved in…but…I will also tell you we haven’t had a single problem with this home. I love it…it is structurally very sound, was well built generally and no settling cracks in any walls on both floors. The other builders that have gone into this subdivision since have not had that reputation, nor the quality and detail. I suggest you snap it up…

  • It appears there is something that should be
    done for the homeowners that are supposed to be still under warranty with their homes. The economy is not just bad for Royce builders, it’s horrible for everyone at this time. I am very disappointed and disgusted as I write my comment. I need my warranty at this time because, my air conditioner has blown out at one of the worse times of the year. I have 2 diabetics in my home and no air and no money to fix my unit at this time. It’s horrible and not fair for homeowners to be denied the remainder of our warranties. A disgusted homeowner needing some positive advice and guidance ASAP.


  • Royce Builders won a “Humanitarian of the Year” PRISM award from the Greater Houston Builders Association in 2006. Does anybody know what for?

    The PRISM awards are announced in this article, but they don’t say the reasons for making the awards…

  • Probably because of their “affordable housing” division that ripped off the poor as well as everyone else. I suppose if you’re building affordable housing that makes you humanitarian. Especially if you’re making a profit.

  • Dosn’t matter if your building any home in Texas, your stuck. Just Google “KB Home Sucks” to see the 1,000’s of sites and links to one of Texas largest builders. Right now Jeffery Mezger current CEO of KB HOME is dumping his stock. Most likely because Bruce Karatz is on trial for some type of fraud later in the month, over some kind of $150,000,000.00 swindle. KB made it sound like they made some sort of profit – the truth is it’s based on the layoff of many workers at KB Home. Big biz controls Austin – not the people. Try to write them a letter – they answer like complete dufases. Then when they want to run for the next Governor – look out! We did not forget our reps and senators help. Asta la vista baby! Google KB Home Sucks!

  • Texas has always been a little corrupt. Just moreso of late. And while Bob Perry made sure that little “commission” that protected the homebuilders instead of the homebuyers was created, in reality they all supported it. And backed the support with nice big checks to key legislators.

    I always tried to point out to buyers that the advantage to an older home in an established neighborhood was that with a good inspection report and just driving around the neighborhood you knew exactly what you were buying.

    I feel sorry for the buyers who were the first and last buyers in the subdivisions that have become “ghost towns” in the middle of nowhere.

  • I bought a home from them in oct 2007 and got riped off.First Iam still trying to figure out how I even got financed based on my income.I was making about $1200.00 a month and my notes where almost $900.00 a month.Then I have an adjustable rate morgage which would go up every 6 months.I thought about it after the fact(I had to give up my home) that they must have messed with the figures to get me in the home at the first place. I couldn’t get them to come fix things that come with the home warranty.If anyone knows what kind if any lawsuit is out on them would you please let me know.

  • If anyone knows what kind if any lawsuit is out on them would you please let me know.

    Lawsuits against people who have filed for bankruptcy are a waste of time unless you know where they’ve transferred all their assets. That’s called creditor fraud. Not that anyone would accuse Royce of creditor fraud. Or mortgage fraud.

    Letting you buy a house you couldn’t afford is not really fraud. Just another example of “compassionate conservatism.”

    Royce was compassionate when they made the loan. Then conservative when they foreclosed. Ain’t vulture capitalism grand?