Tuesday, July 18, 2017

Sleazy Developer Who Illegally Subdivided 330-Acre Parcel, Then Used Seller-Financed Contracts For Deed To Peddle Non-Buildable, Unmarketable Lots In "Off-The-Books" Development To Residents Seeking Homeownership Agrees To Cough Up Nearly $1 Million In Refunds To Reimburse Unwitting Victims

In Caldwell County, Texas, the Austin American-Statesman reports:
  • The owner of an illegal subdivision that was allowed to operate in an isolated corner of Caldwell County for more than a decade despite being known to local regulators is finally being forced to pay for his years of failing to abide by state and county land-use rules.

    Richard Burns, whose Century Oak Estates was created and sustained with what officials described as a disregard for numerous real-estate development requirements, has agreed to pay nearly $1 million to buy out approximately 30 residents and help them move out of his off-the-books development in the rural county that borders Travis County’s southern tip.

    The announcement comes a year after an American-Statesman investigation profiled Burns and Century Oak, highlighting the predicament of those who purchased land in the subdivision only to learn they could not then build on or sell it because Caldwell County considered their property illegal. Several residents, meanwhile, said that Burns had raised the specter of eviction to intimidate them and threatened to turn off the subdivision’s single water well to punish them for late payments.

    Burns maintained that he was providing the opportunity for homeownership to less-affluent residents and never intended to break any laws. He blamed his attorneys for giving him bad advice as he started selling lots in 2004, many of them off a dirt road called Buffalo Run, on the 330-acre property situated on a former wild game park.

    And not all Century Oak residents were dissatisfied.

    But at a legislative hearing days after the article was published, several testified they had been afraid to speak out about problems for years because their owner-financed purchase agreements made them vulnerable to retaliation. Also known as poor man’s mortgages, seller-financed “contracts for deed” grant a buyer title to the property only after paying the seller in full, typically over many years with high interest rates — 10 percent at Century Oak. Buyers don’t build up equity and can be evicted rather than foreclosed on.
    Although Burns faced misdemeanor criminal charges for illegally subdividing his land, Caldwell County District Attorney Fred Weber said he decided the civil settlement offered a better resolution. Finalized last week, it calls for Burns to deposit $850,000 in a trust account administered by a retired state district judge. The money will be used to buy out those who want to move by refunding all payments made to date as well as compensating residents for improvements they made to their properties. It also provides $5,000 per household to cover relocation.

    The deal, negotiated by Weber and the state attorney general’s office, also assesses a $450,000 civil penalty against Burns. According to the terms, however, the fine will not be collected if Burns complies with the trust fund arrangement.
    “We’re all over a barrel,” said Juan Alvarado, who three years ago moved to Texas from Fresno, California, after signing a $98,000 owner-financed contract for nine acres of pasture and a pond. He noted that a refund would not compensate him for the rise in the land’s value in recent years.

    Fredie McKinney said he moved out of Century Oak a year ago, two years into a contract for deed requiring him to pay $1,031 a month for 25 years before he received title. “I just walked away from it, because I knew I couldn’t sell it,” he said.

    Weber said that under the agreement, which calls for anyone who lived in the subdivision since May 2016 to be eligible for the repayments, McKinney would get his money back. The district attorney acknowledged that those who left earlier, however, would have to petition the trustee for compensation.
For the story, see Settlement gives residents a way out of illegal Caldwell development.

For the Texas Attorney General news release, see AG Paxton Obtains $900,000 Judgment against Developer of Illegal Subdivision. land contract for deed rent-to-own