What happened to Neu Community?

NEU Community update

What happened to NEU community? Promises of a new, innovative way of living have remained just that, promises.

BASTROP, Texas - Out with the old and in with the new - that’s the promise of Neu Community.

The development company held an open house in July 2021, advertising future communities around the Austin area that would feature modular, stackable smart homes and be "designed for the EV era." Interested parties could reserve a home via deposit.

However, after sharing updates in emails and on social media, some customers noticed the company appeared to go silent.

One person who wanted to remain anonymous shared email correspondence with FOX 7 after putting a $100 deposit down in July 2021.

The final response from a company spokesperson was in November 2021, hinting at an update in the near future. However, there was still no update provided, after a follow-up by the customer in March 2022.

In 2021, JackTrade Heatherwilde leased a warehouse space to Neu Community Bastrop LLC.

"Their conduct as a tenant raised concerns early on," said Sean Hennessy, managing member at JackTrade Properties.

Hennessy said that the company was late on rent the majority of the time, and they signed the lease without a personal guarantee.

"It doesn't mean that they're a bad company or that they don't intend to follow through on their obligations," said Hennessy. "It's just unusual."

At one point, Hennessy said the company requested to transfer the lease from "Neu Community Bastrop LLC" to "Neu Community, Inc."

"It was again another red flag," said Hennessy. "Why do you need to change your corporation name in the middle of your lease term?"

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In April 2023, according to Hennessy, Neu left with no warning and with roughly five months left on the lease. According to documents shared with FOX 7, the outstanding amount owed by Neu is more than $121,000.

Texas Secretary of State records show a pattern over the last few years of the same managing member filing multiple LLCs under similar names, all including "Neu," before their existence is forfeited.

At last check, only one is still active.

Most recently, Neu Community, Inc., a for-profit corporation, was forfeited by the state.

"Some states have a state income tax that's imposed on corporations. Some states have a franchise tax that's imposed on corporations. Texas has a margin tax, which is a kind of franchise tax that's imposed on corporations and limited liability companies and limited liability partnerships and the like," said David Sokolow, distinguished senior lecturer at the UT Austin School of Law.

If the entity doesn't pay, that’s when the state can issue a tax forfeiture.

"The state can say, ‘We're going to take away your ability to operate as a corporation and thereby remove that limited liability shield that you have. So if you keep on doing business, you're going to be personally liable,’" said Sokolow. "‘However, if you pay the tax plus any interest that's due we'll reinstate you to the corporate form.’"

FOX 7 asked Sokolow what recourse individuals or businesses may have if they feel they are owed money by an entity.

"You can sue the corporation for breach of contract. The problem is that if the corporation doesn't have any money, the corporation is judgment-proof. So it doesn't do you any good. Now, there's a narrow exception. It's called piercing the corporate veil," said Sokolow. "In very unusual cases, a court may actually hold a shareholder liable for a debt or obligation of the corporation, but that requires some kind of fraud on the part of the shareholder, not just a breach of contract, or it requires the shareholder siphoning funds from the corporation."

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Hennessy’s company was finally able to hire a debt collection agency, but it hasn’t gone anywhere.

"The key takeaway for us, and perhaps a word of caution I'd share with other businesses, is the importance of thorough due diligence," said Hennessy.

FOX 7 had some email correspondence with the founder of the company, who noted there had been unforeseen delays due to a variety of reasons, including inflation and the permitting process.

Though moving more slowly than originally planned, he told FOX 7 they recently completed the first model home and are on track to complete the rest of the model homes within the next couple of months. He noted there had been a lapse in communication as they had been working hard to move the project forward.

After the initial correspondence, the founder stopped responding to further emails from FOX 7 that included requests for an interview.