Home Developer Charged With Unlawfully Selling Houses

admin —  March 2, 2010 — Leave a comment

Grande Valley Homes LLC, which is registered to do business as Casa Linda Homes, McAllen, Texas, has been charged with defrauding first-time home buyers by unlawfully selling houses that were encumbered by undisclosed liens. Casa Linda Homes sells and finances residential real estate property. Its business model focuses on first-time home buyers, particularly those with poor credit histories in the Rio Grande Valley, San Antonio and Houston, Texas areas. According to the state’s enforcement action, Casa Linda sold residential properties that were encumbered by one of the following liens: a lien for delinquent property taxes; a lien of a third-party lender; or a mechanic’s lien for labor or materials used to improve the property.

Documents filed with the Cameron County District Court in Texas indicate that Casa Linda Homes did not disclose the liens when unsuspecting buyers entered into their earnest money contracts. When Casa Linda Homes subsequently failed to pay its undisclosed debt, the creditors who were owed money then instituted foreclosure proceedings or filed lawsuits against the home buyers.

The defendant was able to perpetuate this fraud, in part, because the houses were “owner financed” by Casa Linda Homes. As a result, purchasers were not warned about the undisclosed liens by title companies, because Casa Linda did not require home buyers to purchase title insurance. Thus, the developer could sell the properties without home buyers, particularly inexperienced, first-time home buyers, realizing that their new houses were subject to undisclosed liens.

The Office of the Attorney General in Texas has identified multiple Casa Linda properties that are encumbered by undisclosed liens. State investigators, however, believe that the defendant may have improperly sold additional encumbered properties that have not yet been identified. State investigators further believe that Casa Linda has changed its name and is now doing business as First Compass Homes.

Casa Linda Homes told prospective buyers that it would refund clients’ earnest money if their home loan was rejected or if construction of the home was not completed within 240 days of the earnest money’s execution. Customer complaints indicate that, despite its promises, Casa Linda did not always properly refund earnest money.

The state’s enforcement action seeks an injunction that will prevent Casa Linda from selling houses that lack clear title. Further, the state wants to prevent the defendant from selling houses that are not covered by title insurance. The attorney general is also requesting civil penalties of $20,000 per violation of the Texas Deceptive Trade Practices Act.

Texans who are considering buying a home should:

• Be wary of sellers who pressure buyers to make an immediate decision to purchase a home or sign any documents.
• Before signing, carefully review all documents; take them to a trusted independent person, such as an attorney, to help review any terms that are difficult to understand.
• Make sure a title company is involved in the transaction and independently determines who owns the property and checks for liens or outstanding debts for which the buyer could be held liable.
• Never make payments in cash. Use checks or money orders.
• If monthly payments to the seller or financing institution include homeowners’ insurance and property taxes, check periodically with the county tax assessor and with the insurance company to ensure that the accounts are current.

Texans with additional information about either Casa Linda Homes or First Compass Homes should contact the Office of the Attorney General online at www.texasattorneygeneral.gov or call toll-free at (800) 252-8011.

Be Sociable, Share!


Posts Google+

No Comments

Be the first to start the conversation.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>