Use Of Owner Financing, Failure To Obtain Title Insurance Lead To Purchase Of Homes w/ Undisclosed Liens By Unwitting Buyers, Says Texas AG In Lawsuit

From the Office of the Texas Attorney General:

• Texas Attorney General Greg Abbott charged a South Texas developer with defrauding first-time home buyers by unlawfully selling houses that were encumbered by undisclosed liens. The defendant, McAllen-based Grande Valley Homes LLC, which is registered to do business as Casa Linda Homes, both sells and finances residential real estate property. Its business model focuses on first-time home buyers, particularly those with poor credit histories [...]. According to the state’s enforcement action,(1) 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 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.

For the entire Texas AG press release, see Attorney General Abbott Charges South Texas Home Developer With Unlawfully Selling Houses (Developer charged with selling houses that had undisclosed liens; buyers face foreclosure, debt).

For more from the Texas AG on this case, see:

• Lawsuit: State of Texas v, Grande Valley Homes LLC,
• Foreclosure letter to Brownsville homeowner who was a victim,
• Notice to Weslaco homeowner who was a victim.

(1) The state AG's civil lawsuit alleges violations of the Texas Deceptive Trade Practices - Consumer Protection Act.