Answer: I don't think using a grub killer in conjunction with fertilizer will cause problems with the turf. In fact, there's a product called Merit which is a combination ferilizer and grub control product. If your neighbor's lawn was burned after the ferilizer application, I suspect the fertilizer was applied too heavily or not watered in correctly. July and August are not the best months to feed a lawn - the sun is too intense and the air is just too warm. Feed your St. Augustine in the spring or the fall, not in mid-summer.
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