House stands empty while builder and owners hash it out in court
By Donald Bradley
The Kansas City Star
TOPEKA, Kan. (AP) — Thinking about buying a house in this capital city?
Got just the thing.
Three-story, all brick, 11,000 square feet, gated front, white columns, 10-foot walls in the basement. Up top is a domed cupola to look out over 40 acres — you might even see Kansas Gov. Sam Brownback’s house just down the road.
You could be Gatsby of the plains.
What? Sounds too pricey?
Maybe not. In recent months, this new mansion on Southwest Urish Road has been valued at close to $2 million on the high end, then down to worthless and finally all the way to a negative $130,000.
So we’ve got some wiggle room here.
But first there’s this lawsuit that needs to be resolved. A clerk in the sub-basement of the Shawnee County Courthouse in Topeka needed both hands to lug the case file to the records window one day last week. She hefted it up on the counter like she was bucking a bale of hay.
“You want all of it?” she asked. “There’s more.”
No one has ever lived in this five-bedroom, 6 1/2-bath house. Maybe no one ever will. Located on a blacktop a mile or so southwest of Topeka, it could stand for years as a monument to anger, indulgence and extravagance unleashed. Built with inheritance money, the house has a slide so kids can zip from the top to lower levels — or could, if they could get inside.
The owners are currently living in an old, small, white bungalow that suggests more Atticus Finch than Jay Gatsby. It sits directly in front of their unfinished mansion.
Here’s another twist: Homeowners often appeal the appraised value of their property to their county. In this case, Shawnee County did the appealing.
“It’s a big mess is what it is,” a neighbor said. “Out here we call it the Taj Mahal.”
She shook her head.
“Such a waste of time and money. How something so beautiful could turn so ugly.”
The legal fight pits builder Randy Lilley and his wife, Regina Lilley, the plaintiffs, against the Topeka couple who contracted them to build the home, Daniel Jr. and Peggy Bailey.
At one time, the Baileys were delinquent on paying taxes not just on that house, but also on other properties they own. They are now current, Shawnee County officials say.
Federal records show that Daniel Bailey filed for bankruptcy in 1996. In 2004, he was sued by the city of Topeka for an unpaid $82.66 water bill.
Then Peggy Bailey inherited money from her grandmother.
“I have three kids, and most of their friends come to my house to hang out,” she answered in a deposition when asked why she and her husband built such a large house. “The bigger they get, the more room they take up.”
Lilley said in his deposition that he told Daniel Bailey he needed to be sure the couple had that kind of money before he proceeded.
“He told me he could afford to build that house three times over,” Lilley said.
Lilley alleges in his lawsuit that the Baileys fell behind more than $336,000 in agreed-upon monthly installments during construction, which began in August 2009. Lilley petitioned to foreclose, saying the Baileys’ failure to pay rendered him unable to pay subcontractors, thus damaging his professional reputation.
In response, the Baileys contend in documents that Lilley botched the job, partly because he’d never built a house that size. They say he used defective and substandard materials. They also accuse Lilley of fraudulently misrepresenting the cost of construction and of not fixing problems such as leaks, wavy drywall and improperly installed support columns.
They further allege improper window installation, warped trusses in the garage, missing hardware, leaky pipe fittings, poorly constructed stairs and more.
In response to the response, Lilley said some of those issues arose because of a work stoppage caused when the Baileys locked him and his workers out of the house. Some materials were not delivered because the Baileys stopped paying, Lilley alleges in documents.
According to Shawnee County Appraiser Mark Hixon, the house, when completed, would be valued at roughly $2 million. In 2011, when it first hit the tax rolls mid-construction, it was appraised at roughly $1.4 million, meaning a tax bill of $20,376.
Last year, with the legal battle in high gear, the county lowered the appraised value to $565,860 — a tax bill of $8,200.
The Baileys protested to the Kansas Court of Tax Appeals. They submitted a report by an engineer who concluded the problems were so extensive that the house needed to be torn down and rebuilt.
The Baileys put the value of the house at negative $130,000 — the cost of razing.
Carl Edwards, a tax court hearing officer, agreed with the Baileys and the engineer’s report. Edwards put the value of the house at $0.
“We weren’t qualified to challenge an engineer’s report,” Hixon said last week. “But then I got an email from someone saying the builder had an engineering report too.”
The second report acknowledged problems with the house, but nothing necessitating tearing it down.
“Let’s appeal this (Edwards’ decision),” County Counselor Rich Eckert told Hixon.
On June 7, a panel of Court of Tax Appeals judges reversed Edwards and restored the earlier appraised value of $565,860.
“And right now we’re on hold,” Hixon said. “I don’t think anybody knows what’s going to happen to this place.”
But probably nothing until the lawsuit is resolved.
“We’ll pass,” Peggy Bailey said last week in her yard when asked for a comment for this story.
Over the years, the Baileys had been involved in several businesses in the Topeka area, including a family-owned recycling and scrap metal operation. Daniel Bailey also sold real estate. Peggy Bailey, who said in a deposition that her college career consisted of a few early childhood classes, worked as a manager of an investment company.
The two married in 1988 and have three children. When they decided to build a new house, they contacted Lilley, a builder Daniel Bailey knew from selling real estate around Topeka.
Peggy Bailey’s grandmother, who headed a family trust, had died in 2008. Peggy Bailey said in a deposition that she was a 25 percent beneficiary of the trust.
“If you requested a distribution, it would be given to you?” an attorney asked her.
“Probably,” she answered.
She told attorneys she got $1.3 million and put it in a bank to satisfy Lilley’s demand that the money be in place.
During his deposition, Daniel Bailey was asked whether he’d told Lilley he could afford to pay for the house three times over.
“It’s possible,” Bailey answered.
On Aug. 21, 2009, the Baileys and Lilley signed a construction contract. Fourteen months later, Lilley filed his suit to foreclose on the property.
Today, weeds rise in the gravel lane that winds a few hundred feet to the big house in a field. People may live there someday. They may throw grand parties, and kids may squeal with joy as they ride the slide from the top floor.
But for now, the empty mansion sits alone and quiet.
“People sometimes ask why there is a hotel in that field over there,” the neighbor said.
“Anymore I just say, ‘I don’t know.’”
