Legend Homes teams up with Washington company under Chapter 11 protections

Legend Homes, the financially troubled builder of several large Corvallis subdivisions, has formed an alliance with one of its competitors aimed at keeping both companies afloat through Chapter 11 reorganizations.

Portland-based Legend is teaming up with Pacific Lifestyles Homes of Vancouver, Wash., in a marketing alliance to sell 100 homes by March 31. The sale includes five houses in Legend's Willamette Landing subdivision in South Corvallis and 10 in a Pacific Lifestyles development in West Salem called Chandler Estates.

Both companies filed for protection from creditors last year under Chapter 11 of the bankruptcy laws. While their assets are tied up in court pending approval of their separate reorganization plans, the builders are allowed to continue selling completed homes and do a limited amount of new construction.

"We have a cash-collateral agreement that allows us to maintain a certain inventory of houses for sale," explained Jim Chapman, president of Legend Homes. "As homebuilders, it's kind of hard for us to keep the doors open unless we sell something."

Chapman said money from home sales goes into a protected account. Ultimately, a bankruptcy judge will determine what happens to the proceeds from those sales.

In addition to Willamette Landing, Legend Homes is the developer of Grand Oaks and several smaller subdivisions in Corvallis and North Pointe in North Albany.

It also is the developer of Witham Oaks, a proposed 221-home subdivision in Northwest Corvallis. Work on that project was postponed last year when the housing market took a dive and is now on hold until the bankruptcy judge approves the company's reorganization plan, due to be submitted March 31.

Chapman told the Gazette-Times on Wednesday that the company would like to resume work on Witham Oaks when the housing market recovers.

"We would dearly love to keep that project, but … it's up to the court," Chapman said. "We would like to do Witham Oaks whenever the community is in need of it."

Legend Homes hopes to emerge from bankruptcy protection during the second quarter of this year. Pacific Lifestyle Homes, which filed for Chapter 11 later, is shooting for the third quarter.

Both companies are hoping their joint marketing push will help move them in that direction.

Kevin Wann, Pacific Lifestyles' CEO, said prices had been reduced to reflect the downturn in the housing market.

"The homes are priced to sell," he said.

A listing of the properties is available online at www.newhomesale.org.

Bennett Hall can be reached at 758-9529 or bennett.hall@lee.net.