Before the foreclosure auction, Jack and Sue Cary had lived in their retirement home on Nicklaus Drive in Old Orchard Beach, Maine, for nearly three years. They made a playroom for their grandchildren in the basement, hung family photos on the walls and planted flowers from their previous house in the garden.
But all along there was uncertainty.
They had signed a contract to pay developer Bernie Saulnier Jr. $345,000 in cash to build the one-story house with a small front porch and fireplace in the living room in his new subdivision, The Legends. They paid more than $200,000 in contracted installments and, after the closing was delayed, were granted occupancy while waiting to complete the purchase. But Saulnier never closed the sale because of unpaid liens, they said, leaving them living in a house they didn’t legally own.
On June 4, after Saulnier’s primary lender foreclosed on his $1.5 million loan, the Carys’ house, seven undeveloped lots and another occupied house in the neighborhood were auctioned off and purchased by the same lender, County Mortgage of Newton, Mass. The Carys, who say they could not afford to pay twice for their house, stood on the sidewalk and watched as it was sold for $350,000.
“You want to know what it was like?” Jack Cary, 71, said. “It was like getting shot and knowing you’re dying.”
Nearly two months after the auction, town officials and residents of the neighborhood are still waiting to hear from County Mortgage about its plans for the properties. The status of the two occupied homes is not the only complication.
Town officials say Saulnier was in violation of the approved plans for the subdivision and that unresolved issues in the neighborhood need to be remedied. These include a water drainage problem being monitored by the Maine Department of Environmental Protection that residents say has caused flooded basements and cracked foundations.
Multiple local businesses that worked on the project — including a landscaper, excavation company and plumber — filed liens against Saulnier’s properties when their bills went unpaid. Some of the liens, including one of more than $36,000, were discharged when two of the houses were sold, but it is unclear whether other lien holders are still waiting to get paid and what they are owed. Attempts to reach some of the lien holders were unsuccessful.
Saulnier, a Massachusetts native who lives in Saco, had successfully completed housing projects in Wells and Old Orchard Beach before he started developing The Legends. But other high-profile projects he pitched in Saco and Portland were derailed by financial issues, leading to multiple liens on his properties and three other foreclosure auctions.
The Legends subdivision — also referred to as Legends Cove in municipal and court documents — had problems from the time construction began in 2014. Residents said their houses took far longer to build than promised, liens from contractors piled up, and town officials struggled to get Saulnier to address a litany of issues they say violated approved subdivision plans. After putting a stop-work order on the subdivision in 2017, the town last year started enforcement action against Saulnier before the properties were sold at auction.
County Mortgage has indicated to both the Carys and Town Manager Larry Mead that it intends to sell the undeveloped lots but has not said what may happen with the two occupied houses that it purchased as part of the auction. The company did not respond to multiple requests from a reporter for information about its plans for the subdivision.
Mead said it has been difficult to hold Saulnier accountable for the ongoing issues in the subdivision and that the town may have to file suit against him if the issues are not remedied even though he no longer owns the property.
“This is a developer who was not responsible in the way he approached this development,” Mead said. “He didn’t have adequate capital and made promises to the contractors, homeowners and town that he couldn’t deliver on.”
Saulnier, however, disputes the town’s claims there is a lot of unfinished work in the subdivision. He said he had intended to take care of a few remaining issues and close with the last two homeowners before the project ran into financial trouble. He could not move forward with work on the subdivision after encountering unexpected costs, an investor stopped raising money and County Mortgage changed the terms of his loan, he said.
“If the investor doesn’t continue to invest or the lender doesn’t continue to lend, there’s no money to finish stuff,” Saulnier said.
After years of unfinished work and flooding problems from improper drainage, the residents of the neighborhood tried to get police and the Maine Attorney General’s Office to open investigations into Saulnier’s handling of the subdivision. But neither has, the residents said. The Attorney General’s Office consumer division received a call in May about the developer and the caller was advised to retain a private attorney because title to land was involved, according to a spokesperson for the office.
“This is the neighborhood from hell,” said Geraldine Day, who moved to The Legends three years ago.
The Legends, originally called the Hole 16 subdivision, was first proposed by Domenic Pugliares, owner of the Dunegrass Golf Club. The 11-lot subdivision is part of a larger 589-unit development around the golf course that was approved in 1988, according to town records.
In late 2013, Pugliares sold the lots to Saulnier, although Pugliares said he later lost a “very large amount of money” when Saulnier failed to pay back money he owed for the properties.
Saulnier received amended site plan approval from the town the following year and renamed the subdivision Legends Cove. He later marketed it as The Legends, an “exclusive” subdivision where buyers could choose from three house designs, according to fliers advertising the project.
Saulnier had already finished his first project in Old Orchard Beach, a 53-cottage development on the other side of town known as Summer Winds. He was also building out a 30-lot subdivision next to the golf course called Sandy Meadows. Town officials said those projects were completed without any issues.
“It seemed like a nice little quaint area,” Saulnier said of the land that would become The Legends.
Months after Saulnier received the new approvals for his project, Mike McGhee and Geraldine Day heard about the new subdivision. They were looking to relocate from Massachusetts to Maine to be closer to family and, after meeting Saulnier and seeing one of his other developments, decided to build in The Legends. They signed a contract with Saulnier in November 2014 that said the house would be done the following July 1.
Work at The Legends started in early spring 2015. That April, Richard and Mary Kay Whitmore were looking to move from their condo on the first fairway at Dunegrass. The couple, originally from Waterville, had looked at a handful of houses in the area before they drove by Saulnier’s new subdivision. Drawn to the quiet spot, they decided that day to buy a house from Saulnier.
At the same time, the Carys were looking for a house in the area. They were both retired, loved Old Orchard Beach and wanted to be halfway between their two sets of grandchildren. After cashing out stocks, they had cash in hand to build the home they intended to live in through their retirement.
A fourth couple, who declined to be interviewed for this story, signed a contract with Saulnier for a two-story house to be built across Nicklaus Drive from the Carys’ house. All of the buyers had contracts saying Saulnier would finish their houses in 120 days.
The Carys, who spend winters in Florida, sat down with Saulnier to make plans for their house. The couple chose the “Golden Bear,” a 1,671-square-foot base model with three bedrooms and 2.5 bathrooms priced at $335,000. Saulnier gave them a $10,000 discount for paying cash. The Carys later added a fireplace, crown molding and wood floors, bringing the total price to $345,000. The contract they signed with Saulnier Development said the Carys would pay a $50,000 deposit, followed by payments in $50,000 installments as the house was built, an arrangement a local real estate broker said is unusual in residential development.
There were signs early on that things weren’t going well in the construction of the subdivision. When crews started putting in the road, they discovered the area was full of buried stumps from when the golf course was built. That unexpected work slowed the project and cost $200,000 to fix, Saulnier said.
“We came out of the gate with a major problem,” Saulnier said. “From Day 1 it wasn’t an easy project.”
Saulnier said there were further delays because of a lawsuit involving Pugliares and the previous owners of the golf course. Later, there were financial issues when an investor in J&B Partners LLC, one of Saulnier’s business entities, stopped investing, Saulnier said.
A former J&B Partners LLC business partner, John Veneziano, last month filed a lawsuit against Saulnier alleging the developer used money intended for a proposed Saco development for other projects and his own personal expenses. Saulnier denies those claims and has filed counterclaims alleging Veneziano failed to secure $32 million in loans, leading J&B Partners to run into financial trouble that culminated with the foreclosure auctions on properties in Portland and Saco.
The problems in the subdivision became increasingly obvious to the couples waiting for Saulnier to finish their houses. They said they watched as different subcontractors started and then stopped work on the subdivision. The homeowners struggled to get Saulnier to explain the delays, they said.
Town inspectors were also watching the work site, documenting issues such as the road being built without proper inspections and a foundation being put in without a building permit. Email exchanges between town employees and Saulnier show they repeatedly asked him to fix problems with erosion control and improper fencing, among other issues. Dan Feeney, who was the town’s code enforcement officer in 2016, wrote in a memo that Saulnier told him the issues would be addressed immediately, but no one showed up to do the work.
“I am at the point I feel Mr. Saulnier is not working in good faith to rectify the problems and appears to be stalling,” Feeney wrote.
McGhee said his house “wasn’t even close” to being finished by July 1, 2015. He and Day tried to get out of their contract but couldn’t without losing the money they’d already invested. They had sold their house in Cape Cod and had all of their belongings in trucks en route to Old Orchard Beach when Saulnier canceled their scheduled closing because the house wasn’t going to be ready, they said. They put their belongings in storage and moved into a family member’s basement.
“We decided to stick it out,” McGhee said. “We just battled the whole way through.”
Saulnier finished all four houses between January and November 2016. He obtained certificates of occupancy and the couples moved into their homes while still waiting for closing dates. After a series of closings were canceled by Saulnier for unexplained reasons, McGhee, Day and the Whitmores signed the papers and officially purchased their houses in 2017.
The Carys had sold their house in Connecticut in anticipation of their house in Old Orchard being done in August 2015. When their house wasn’t done in time, Saulnier paid to store their belongings and put them up in a hotel for several weeks. Most of their belongings were in storage for months and they lived out of suitcases in their car, Jack Cary said. They later stayed with family members until their house was done.
The Carys moved into their house on Aug. 4, 2016, but Saulnier continued to reschedule their closing, they said. The Carys thought about trying to get out of their contract, but feared they’d lose the $205,000 they had already paid for the house. They had also paid nearly $4,000 in property taxes owed by Saulnier to avoid a tax lien and spent more than $3,000 to fix problems with water runoff from their roof and $4,500 to address basement flooding issues.
“Once you get started and you’re vested, you don’t want to pull out,” Sue Cary, 71, said. “You hope for better things.”
The Carys, who have now been working with an attorney for four years, say they regret not doing more to vet their arrangement with Saulnier before they signed the contract.
Dava Devin, a principal and broker at Portside Realty Group, said the arrangement the Carys made with Saulnier is unusual in residential development, where building loans are most often used and provide a level of protection for homebuyers and purchase agreements are vetted by professionals. Typically, buyers will put a deposit on a house before it is built, then pay off the remaining balance when the house is finished, she said.
“In that situation, they’re only risking that deposit if the contractor goes belly-up,” she said.
In July 2017, Saulnier began publicly pitching his ambitious plan for 6 acres of undeveloped land on Saco Island, a site that sits in the Saco River near the city’s downtown.
Saulnier’s vision was big: a unique $40 million project that would include apartments, a boutique hotel, restaurant and two marinas. He brought public officials on a boat tour to show off the possibilities for the property, one of the few undeveloped areas near the re-energized mill districts in Saco and Biddeford.
Jack Cary had a hard time believing what he was hearing. Still living in a home he did not own and unable to get Saulnier to respond to messages, he wrote a letter to municipal officials in both Saco and Old Orchard Beach.
In the letter, Jack Cary warned the towns against working with Saulnier and said the developer “stoutly refuses to direct his time, financial or energy resources into completion of his contractual obligations to homeowners within The Legends subdivision.”
“He has turned his back on this, and instead, devotes those resources to other projects,” Jack Cary wrote. “We believe his proclivity for disregarding his moral, financial and contractual obligations, as shown by his conduct in The Legends subdivision, should weigh on your decisions in current and future applications made by him or his owned affiliates as you consider the best interest of the citizens of your municipality who rely upon your good judgment to protect them.”
Saulnier held several public meetings about his plans for The Waters and, throughout 2017 and 2018, announced a hotel developer and a local brewery had agreed to be part of the project. But he never started the planning process with city officials in Saco before that project also ran into financial trouble.
In June, Veneziano, the business partner from J&B Partners, filed a lawsuit against Saulnier that claimed he “squandered, embezzled and stole” an unspecified amount of the $6 million Veneziano says he raised for The Waters project, an accusation Saulnier denies. The following month, the Saco Island property Saulnier had purchased for the development was sold at foreclosure auction, along with a second property in Portland where Saulnier had approval to build apartments.
Ted Moore, a Massachusetts developer, paid a total of $36,000 for the two properties, but also took on nearly $3 million in combined liens that had been placed on the properties.
While Saulnier pitched his plans for The Waters, town officials in Old Orchard Beach were still trying to get him to address the problems at The Legends. The homeowners say during that time they were dealing with basement flooding, cracked foundations and other issues stemming from Saulnier’s failure to install the proper drainage system in the neighborhood.
Last fall, town officials and a consulting engineer from Wright-Pierce again visited The Legends and code enforcement officer Rick Haskell determined the subdivision continued to be noncompliant with the approved plans. On Nov. 13, he sent Saulnier a formal enforcement letter that outlined 23 items that needed to be addressed, including installation of a curtain drain, stabilization of culverts, repairs to sidewalks and installation of light poles.
“We continue to receive promises that work will be done and you’ve made no progress,” Haskell wrote in the letter. “Due to your inaction, the town has no other choice than to find resolution through formal enforcement.”
Haskell told Saulnier in the letter that enforcement actions would be temporarily halted if the developer submitted a plan to address the issues that was acceptable to the town.
In a Dec. 3 letter to Haskell, an attorney for Saulnier said Saulnier Development intended “to turn its full attention to Legends Cove in the spring of 2019” after completing another subdivision in Old Orchard Beach. Attorney Zachary Greenfield outlined in the letter how Saulnier would address or evaluate most of the issues brought up by Haskell immediately or within 45 days.
But most of that work did not happen and by January, Haskell was again writing to Greenfield about the issues at The Legends. This time, Haskell gave the developer dates by which each issue needed to be taken care of and said the town would start legal action if they were not addressed.
The town has not yet pursued legal action because of the foreclosure auction. Mead said the best outcome would be for a new developer to take over the project and work with the town to fix existing problems and finish the subdivision.
“The biggest concern for the town at this point, in addition to having the project move forward, are the two homeowners who have not been able to close on their properties,” Mead said. “That is, first and foremost, the piece that is most unfortunate, disappointing and is really on the head of the developer. Those people need to be made whole.”
Saulnier said he believes County Mortgage will work with the Carys and their neighbors to make sure they’ll be able to stay in their houses.
But the Carys aren’t so sure. They hope they’ll have answers from County Mortgage soon and will, after three years, be able to find a way to finish buying their house while getting credit for the money already paid to Saulnier.
“We’ve tried not to be beaten down by this. We’ve hidden from our kids how we really feel. It’s embarrassing with your friends to have them realize you’ve entered into such a bad deal,” Sue Cary said. “If we were smarter, we should have walked away with less of a loss. But we had hope and faith that it would work out.”
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