Fulton Homes files for chapter 11 bankruptcy leaving a cloud of dust over their operations in 21 actively selling communities throughout the valley. The Tempe-based private home builder is one of the largest in the State and has been building homes since 1974.
The scheduled chapter 11 bankruptcy means that Fulton Homes with continue to operate while a court reviews the $100 to $500 million that Fulton owes individual creditors. However, it is going to be hard for Fulton to regain consumer confidence and restore their brand image to prospective buyer’s after disclosing how financially unstable the company is.
Some other impact on the bankruptcy will mean that past homes under warranty may no longer be valid. Also, Fulton will face higher interest rates from creditors and more of Fulton’s assets will have to be used as collateral. It is speculated that Fulton will immediately cease building in several of their 21 active subdivisions. Some of the more prominent active communities include:
- Fulton Ranch – Chandler
- Geenva Estates – Chandler
- Freeman Farm – Gilbert
- Cortina – Queen Creek
- Ironwood Crossing – Queen Creek
- Cobblestone Farms – Maricopa
- Villago – Casa Grande
- Coldwater Springs – Avondale
- Fulton Estates – Avondale
- Royal Ranch – Surprise
Fulton was highly vested in urban sprawl developments in areas like Queen Creek, Maricopa and Casa Grande that have been hit the hardest in the market downturn. I suspect that these developments will be the first close their doors as Fulton restructures its company.
According to the Arizona Department of Real Estate, there has been 41 home building projects that have filed for bankruptcy since 2007. There are also numerous valley home builders that are in financial trouble. I sound like a broken record on this topic, but if you are considering buying a new home please consult a professional realtor and check the financial solvency of any prospective builders.
