Dec. 5, 2006 12:00 AM

Hundreds of homes and lots left unfinished in Pinal County by bankrupt home builder Turner-Dunn may be auctioned to clear tens of millions of dollars in debt and finally complete some homes two years after buyers signed sales contracts.

Scottsdale-based Charlevoix Homes LLC has offered $29 million in a Bankruptcy Court settlement to buy the properties in Casa Grande and Maricopa, and it proposes finishing homes at the original contract price for buyers who still want them.

However, buyers still will be locked into higher prices from two years ago. Pinal County's cooling housing market has forced a reduction in prices for big new homes this year by tens of thousands of dollars to the low $200,000s.

"We hope to get momentum back into the sale of the properties," said Dan Collins, an attorney in the bankruptcy trustee's office.

An auction hearing is scheduled for Dec. 21 in federal Bankruptcy Court in Phoenix before Judge James Marlar, who will consider the deal after opening bidding to other interested parties, Collins said.

Mike King, an attorney representing Ohio Savings Bank, said the lender anticipated that the properties would be completed by the winning bidder.

Charlevoix Homes' offer would pay off Cleveland-based Ohio Savings Bank and Seattle-based Weyerhauser Realty Investments, which made loans to Turner-Dunn for purchasing land and building homes. Ohio Savings would get back about $23.5 million, and Weyerhauser would get about $4.7 million.

The rest would go to other secured creditors, including subcontractors. But home buyers would be last in line and unlikely to get their earnest money deposits back, bankruptcy attorneys and experts have said.

Half-finished homes have sat for most of the year deteriorating in heat and storms since Turner-Dunn, owned by Marc Dunn, walked away from construction and contracts early this year with about $650,000 in earnest money from more than 150 buyers, and millions owed subcontractors and banks.

Former partner Louis Turner sold his ownership stake in the company for $1.5 million before the spring construction stoppage, Bankruptcy Court records show.

Charlevoix plans to count buyers' earnest money and may be willing to double-count it in some cases to close deals and apply those payments toward new homes in Charlevoix's other developments, CEO Mike Roberts said.

"At the end of the day, we want to get people into homes," Roberts said. "There isn't a more important purchase you'll ever make in your life."

About a dozen homes have sustained enough damage to warrant being razed, Roberts said.

After finding a new home from a different builder in the same neighborhood, Tony Tellez said he no longer wants the $262,000 house in Maricopa that he signed for two years ago. He won't pay the now higher price and losing $2,500 in earnest money is almost worth having Turner-Dunn out of his life, he said.

"I'd basically be buying a money pit," Tellez said. "I'd get a $262,000 home that wouldn't even appraise at that price."

Gerald and Barbara McCurdy of Caledonia, Ill., paid $28,000 in earnest money on a $277,000, 3,300-square-foot house in Casa Grande because Turner-Dunn considered them investors and charged a premium. They planned to rent it out until retirement in a few years and can't afford to walk away.

Turner-Dunn's collapse prompted an ongoing investigation by the Arizona Department of Real Estate and lawsuits. Subcontractors slapped liens on Turner-Dunn's housing lots and in some cases on new homes that buyers had moved into. The bankruptcy trustee is still investigating transactions by Dunn and Turner.

Charlevoix had to pay $100,000 in earnest money to the bankruptcy trustee and provide documentation of its financial strength and ability to finish both developments. Turner has offered to buy half of the properties, Roberts said.