Investors in Neu Community project file civil suit, claim mismanagement of funds
BASTROP COUNTY, Texas - Investors in Neu Community are taking hard money lenders and Neu Community management to court.
As early as 2021, the company advertised modern, modular housing with a focus on community, promising to launch a few, affordable developments around Austin. As of May 2024, no homes have been finished for customers.
Previously, FOX 7 had reported on frustrations from those who made deposits on homes as well as a real estate company that worked with Neu.
On Tuesday, May 21, a hearing was held after documents were filed by investors in Travis County District Court. The plaintiffs are made up of members of Neu Community Lake Travis, the LLC overseeing one of the planned Neu Community properties.
"There is a lot of financial entanglement here," said Jitin Bhandari, a member of Neu Community Lake Travis LLC.
The petition asks for a temporary injunction on an impending foreclosure of the property, which was granted by the judge on Tuesday. A hard money lender involved in the project plans to foreclose on Neu Community Lake Travis because the LLC’s manager, Jonathan Jenkins took out multiple multimillion dollar loans and those loans defaulted, according to court documents.
After investing roughly $3.5 million dollars across the board, Jitin Bhandari and other investors said they’ve experienced unfulfilled promises and a lack of communication regarding handling of their funds.
"We moved into this project in September of 2021 and in 18 months time frame, ideally, it was supposed to be complete. So we were supposed to get homes built by April of 2023," said Bhandari. "And here we are standing in front of the courthouse, unfortunately, and no project, no work has been done. We were, as investors, also promised many other things and nothing has come to fruition."
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A stop work order was issued on the Lake Travis property in November 2021. (LCRA)
A stop work order was also issued on the Lake Travis property in November 2021. During Tuesday’s hearing, Jenkins confirmed that he had not obtained any more permits at that site since the stop work order.
If a foreclosure occurs, members said they will lose their principal investment, any return and the homes they were promised. Along with temporarily stopping a foreclosure, the petition accuses Jenkins of breaching fiduciary duty in management of member funds, claiming that instead of paying off loans and interest, he directed funds to other affiliate properties like the Neu Creekside property in Bastrop. Jenkins said that property is where they have started building the model homes due to the nearby assembly facility.
"This is not just about an investment. This is about a larger community here in Austin. All those people who are associated with investing in these kinds of projects as they come along," said Bhandari. "We come as investors, with big faith, this was a green project and all of that. And we see it crumbling, and it's disheartening. But I think there are quite a bit of lessons that we need to learn, not only me as an investor and my fellow investors, but also the community at large."
"As we navigate the complexities of Neu Community and their partners' financial and real estate dealings, it's crucial to prioritize accountability and transparency in your housing investments, whether for renting or homeownership," said Desiree Patno, another investor in the project. "Stay proactive, educate yourself, and remember that actions speak louder than words."
FOX 7 reached out to Jenkins' attorney and was told they couldn't provide a comment at this time due to the pending litigation.