Kelly Greenlees thought she had found her forever home. The house on a corner lot in a new Rosemount subdivision, Harmony Villas, was both close to her family and, at $389,000, affordable.

She sold her house in North Dakota, signed a purchase agreement and moved into an Eagan hotel in September 2021 while the builder finished her home.

A real estate agent promised it would be ready in eight weeks. Eleven months later, Greenlees was still living in the Hilton, her forever home unfinished and her hotel bill pushing $24,000.

“It was just a nightmare,” she said.

Greenlees didn’t know it at the time, but she was one of dozens of Twin Cities homebuyers who say they’ve faced big bills because of delayed, shoddy or incomplete work by builder Mark Elliot Pasvogel Jr.

The neighborhoods Pasvogel built in Inver Grove Heights, Cottage Grove, Lakeville and elsewhere epitomized a suburban ideal that appealed to young families and downsizing seniors. Residents say that behind the scenes, Pasvogel, through his companies, 1 Stop Inc. and Mark Elliot Homes, failed to deliver what he promised.

Homebuyers have detailed their complaints in a sprawling lawsuit, contractors have sued over nonpayment, and in some cases, city officials stepped in to repair inadequate work. The disputes highlight the shortcomings of consumer protections for Minnesota homeowners when builders do questionable work.

Complicating matters is that Pasvogel died in a 2023 car crash as his legal woes piled up.

“This is a systematic failure that we did not have the right things in place,” said Rep. John Huot, DFL-Rosemount, who has fielded concerns from Harmony Villas neighbors and plans to push for legislative reforms.

Among the allegations:

Harmony Villas residents lodged numerous complaints with Rosemount officials. Meanwhile, the state Department of Labor and Industry, tasked with licensing residential building contractors and investigating complaints, launched an inquiry into Pasvogel’s license in 2021, emails and documents show.

But the department closed the probe after concluding it lacked “sufficient standing” to continue.

An attorney representing a Pasvogel-created trust in the lawsuit against the builder’s estate said in a statement that Pasvogel was a “private person” who didn’t disclose his business dealings to others.

The attorney added that the trust and Mike Thomas, whom the suit identifies as the trustee and a silent business partner, weren’t involved in Pasvogel’s companies. Thomas, a defendant, didn’t respond to questions about the allegations detailed in this story.

Neither did defendant Whitney Meester, Pasvogel’s alleged business partner and the mother of his children. An attorney representing Meester, a real estate agent who worked with Mark Elliot Homes, said in a statement that Meester and other agents named in the complaint were not involved in Pasvogel’s business activities, nor did his building company employ them.

“Any alleged deficiencies related to the construction, billing, warranty, or workmanship of the houses were and are the responsibility of and solely within the control and authority of Mark Elliott Homes,” the attorney wrote.

Pasvogel’s license remained active until he died in April 2023, leaving three children and upending homeowners’ path to financial recourse.

“No one’s been held accountable,” Greenlees said.

Pasvogel’s interest in real estate began when he was 19 years old, according to his LinkedIn profile. The builder, who went to high school in Lakeville, said on social media that he owned 56 Twin Cities duplexes and managed 124 rental properties before turning 24.

A few years into the 2008 housing crisis, St. Paul awarded him and other investors a roughly $670,000 subsidy to flip historic homes dotting the Dayton’s Bluff neighborhood.

“We’re fixing up the neighborhood. We’re providing affordable housing,” Pasvogel said in 2011 to the Pioneer Press, which reported that he and other investors kick-started their business by borrowing from friends and family.

But problems plagued Pasvogel’s early business ventures, records show.

In 2014, a contractor sued him and his house-flipping business, alleging the business owed her thousands for construction work. A conciliation court referee agreed.

In 2016, the house-flipping company and Pasvogel’s business partner were required to repay a credit union nearly $100,000 after reportedly failing to pay off loans; a disagreement over repayment ensued before the parties settled. The same year, the Secretary of State’s Office terminated the house-flipping company, business filings show.

But the end of that venture didn’t doom Pasvogel’s career. Working through the company Mark Elliot Homes, he embarked on his next pursuit, building suburban subdivisions.

Rosemount approved the Harmony Villas development in 2017, adding dozens of homes to the fast-growing suburb.

The neighborhood, comprising homes listed around $380,000, seemed like a great fit for Debbie Benson.

The retired real estate agent and her husband, Mike, were excited to move from Rochester to the Twin Cities area, where their children lived. “Red flags” surfaced soon after the couple signed a purchase agreement in 2018, Benson said.

Construction fell behind schedule. And when they moved in, the Bensons soon noticed that workers often failed to mow their lawns and plow their streets, even though residents paid $245 in monthly HOA fees. Benson said some contractors told her Pasvogel wasn’t paying them on time.

Her husband confronted Pasvogel as problems mounted. In response, Debbie Benson said, Pasvogel yanked their builder’s warranty.

A clause in the one-year builder’s warranty allowed Pasvogel to do that if a homeowner “becomes overly irate, [or] speaks or acts in a threatening or belligerent manner.”

“We’re paying our dues,” Benson said, “and we’re being punished.”

Meanwhile, her neighbor Barbara Jukich was dealing with a deep crack in her back patio and pooling water that killed several bushes and trees, she said. Emails show Pasvogel resisted fixing the problems.

“There is no flooding going on in your home,” he wrote to Jukich after she posted a negative online review in January 2022. He added, “Can you take this 1 star review down?”

The neighbors expected some relief when enough people settled in. At that point, the HOA would be turned over from the builder to the residents, giving them access to a resident-funded reserve meant for anticipated repairs.

But when the switchover occurred, neighbors were startled to find that bank statements showed the account empty.

“The builder/declarant left our association with … no money,” Benson wrote in a December 2021 letter to Secretary of State Steve Simon. She received no response.

As problems accumulated, Benson and other neighbors turned to the city of Rosemount for help, saying Pasvogel hadn’t finished the development the city approved.

A September 2021 list points out construction problems at more than 15 properties, from tilted sidewalks to damaged stoops to incorrectly routed gutters.

Troubles persisted into 2023, when Pasvogel died in an early morning car crash in Lakeville. According to the State Patrol, he rear-ended another car then hit a semi before rolling into a median. He wasn’t wearing a seat belt and alcohol was involved, the report said.

His death rattled the Rosemount homeowners and compounded the challenge facing city officials.

“We’ve had other underperforming developers from time to time,” said Nick Egger, the Rosemount public works director, who wasn’t working for the city when it approved Harmony Villas. “But nothing anywhere near the level of this.”

After Pasvogel’s death, the city declared him in default of the agreement he entered into with Rosemount outlining his development obligations, Egger said. That enabled officials to draw on a letter of credit from Pasvogel’s bank to pay for incomplete work.

The city fixed some public sidewalks, planted shrubbery and reduced the number of lights and trees the site plan required to cut costs for residents. But Egger said it quickly became apparent that the letter of credit wouldn’t be enough to cover the unfinished projects.

“The remainder is going to have to come from the homeowners, sadly,” he said, noting there’s only so much a city can do to resolve problems in a private development.

Sean O’Neil, the state Department of Labor’s director of licensing and enforcement, said officials didn’t come across any major concerns, such as serious criminal convictions or bankruptcies, when they issued Pasvogel a residential building contractor license in 2013.

But by 2021, the department was receiving complaints about construction delays at his developments, according to emails shared with the Minnesota Star Tribune. One homeowner in an Inver Grove Heights neighborhood criticized the builder for springing steep price increases for construction materials on them. Others sounded alarms about shoddy work, O’Neil said.

That year, the department launched an investigation into Pasvogel’s license.

“The amount of contacts the Department is getting is abnormal,” an investigator emailed Pasvogel in 2021, expressing concern about the influx of complaints. The builder blamed construction delays on COVID and the number of homes he was constructing.

But officials closed the investigation in September after concluding that they lacked sufficient standing to continue, emails show.

The department, O’Neil said, can’t compel a builder to fix construction problems unless there are violations of state building codes.

“If all we have is an allegation of bad workmanship, that would have to be resolved in civil court,” O’Neil said.

In July 2022, the department took administrative action against Mark Elliot Homes over alleged failure to correct a state building code violation. Few details are available about the issue, but records show Pasvogel corrected it about five months later.

The state has a Contractor Recovery Fund, which will dispense up to $100,000 to homeowners who have a final court judgment on a claim of misconduct against a licensed residential contractor.

But some homeowners say it’s not worth the trouble of hiring a lawyer for a payout that often falls short. And subcontractors and material suppliers aren’t entitled to it, O’Neil said, even if a judge ruled a builder owes them money.

Pat Jirik, whose Farmington-based business provided sod for Harmony Villas, is among those still seeking payment.

Jirik’s company alleged in a May 2022 lawsuit that Mark Elliot Homes owed more than $19,000 for sod installation. An attorney representing Pasvogel denied that allegation, and the parties ultimately settled, with Pasvogel pledging to pay.

But after Pasvogel died, Jirik said he didn’t receive thousands of dollars he’d been promised.

“The plans and the specs were always decent, just he never followed through with what they were supposed to be,” Jirik said. “He’s always saving a little here … robbing Peter to pay Paul.”

The Minnesota Consumer Protection Act can be applied to bar contractors from “ripping off” homebuyers, said Ryan Supple, one of the attorneys representing the 16 homebuyers in the lawsuit. But Supple said that act is largely meant to deter intentional fraud and rarely comes up in the context of construction litigation.

Some states have other ways to facilitate fixes. In California, the Right to Repair Act mandates that homeowners take a series of steps before suing a builder — first notifying them of alleged defects in writing, then giving the builder an opportunity to inspect the home and complete repairs in a timely manner.

“This is intended so that the builder has an opportunity to learn about any issues before the homeowner just goes off and files a lawsuit,” said Darrell P. White, a California-based business trial attorney who handles construction defect cases.

Huot, the state House member representing Rosemount, wants to introduce legislation to strengthen consumer protections and require state agencies to take a more proactive approach to regulating the industry.

“We shouldn’t be looking at lessening laws on builders,” he said. “We should be looking at tightening them up a little bit.”

For now, Harmony Villas homeowners are still dealing with the fallout of Pasvogel’s business practices and his death.

A court has moved the lawsuit to arbitration, though some defendants have filed motions asking to be exempted. A spokesman for the Minnesota Attorney General’s Office wouldn’t confirm whether it’s investigating Pasvogel or his businesses.

Jukich ended up paying thousands to fix the cracked patio and drainage problems, which one outside contractor told her could have jeopardized her house’s foundation.

Greenlees, who lost a lock on a lower mortgage rate amid construction delays, now struggles to make her monthly payments.

And Benson said the HOA has had to levy three assessments and raise dues to pay for incomplete work and replenish the reserve account, currently at $106,000. She maintains that the problem is bigger than any one builder.