More Contract For Deed Horror Stories As Texas Landowner Uses Controversial Device To Peddle Lots In "Off-The Books" Rural Subdivision That Has Never Been Platted Or Surveyed & In Apparent Violation Of Applicable Land Use Laws To Unsophisticated Buyers; Victims Now Discover They Can't Build Or Sell

In Caldwell County, Texas, the Austin American-Statesman reports:

• Seeking a place to retire from his corrections officer job in California, Juan Alvarado fell in love with the rural Caldwell County land as soon as he saw it. The parcel lies just beyond a gated subdivision entrance marked by a replica Statue of Liberty flanked by wildflowers. A dirt road winds under spreading oaks to fields covered fence to fence with a lush carpet of grass.
  
  Responding to an ad promising only a $500 down payment for the 9 acres, Alvarado signed an owner-financed contract for the remaining $98,000. In June 2014 he packed up and moved from the Fresno area with his wife to Century Oak Estates, a subdivision in the far east corner of the county.
  
  But after hiring a contractor to construct his dream home, Alvarado received devastating news. County officials refused to issue his building permit. Their reason: Century Oak Estates, in its entirety, was in violation of the law. “Everything that is out there is illegal — everything,” said Kasi Miles, who manages subdivision permitting for Caldwell County, referring to the property’s missing legal foundation.
  
  “I was stunned,” Alvarado said. He and his wife passed the sweltering summer in a small trailer — “a living hell” — before finding another place to live in nearby Luling.
  
  His isn’t the only complaint. Some Century Oak Estates landowners say they have tried to sell their property in recent years only to find out it was impossible because it had never been surveyed.
  
  Many of the properties — mobile homes, primarily — have been tied into a single untreated and unlicensed well. Century Oak’s owner, Richard Burns, has threatened to turn off residents’ water for violations of his subdivision rules, or even late checks. Anyone with delinquent payments “will be disconnected from the water system,” a December 2013 letter warned.
  
  Local inspectors routinely encounter land-use violations, particularly in rural areas, where isolated properties and a live-and-let-live attitude can combine to produce an occasional skirting of the rules. But those familiar with Century Oak said it appears to be of a higher magnitude: an entire development created and sustained for a decade with apparent disregard for state and county land-use laws. The absence of records means the county is even uncertain of how many people live there; Miles says it could be as many as 300.
  
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  Miles said she contacted Caldwell prosecutors more than six years ago seeking criminal charges. When they failed to act, she said she stopped looking into the isolated community. “I knew it was illegal,” she said. “So there was no point in me going back.”
  
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  [One lot owner], a disabled veteran, said he fears losing his property because recent letters from Burns informed residents they need to install their own wells — a cost he can’t afford. Burns also has said failure to install the systems would be considered a violation of residents’ contracts and grounds for him to evict them from the premises.
  
  Burns said he hasn’t acted on the threat. Still, housing advocates say eviction is a legitimate concern to residents because of the antiquated purchase contracts. Also known as poor man’s mortgages, the seller-financed contract for deed means a buyer receives title to the property only after paying the seller in full, typically over many years with high interest rates — 10 percent at Century Oak.
  
  Unlike standard bank mortgages, in which a buyer’s payments build equity, payments in contracts for deed add up to nothing until the final one is made. Sellers also can evict residents rather than use the foreclosure process. A 2012 University of Texas study of the contracts in some Texas counties found a 45 percent failure rate for buyers.

For more, see Long aware of problem community, Caldwell County now faces irate residents (Residents say they now can’t sell or build on their property; Developer Richard Burns has been criminally charged; County officials concede they knew about Century Oak Estates for years).

For a follow-up story, see Regulators open investigation into off-the-books Caldwell subdivision (Property transfers in the subdivision apparently were done through so-called contract for deed transactions). land contract