Texas AG sues Valley home developer over undisclosed back taxes, liens

DONNA — With a lousy credit history and a modest income, Eric Shidler thought he’d found the deal of a lifetime in Casa Linda Homes.

The McAllen-based company helped put him in a modest house in Donna two years ago by offering its own internal financing and a lay-away program to help him cover the down payment.

“It wasn’t just the best deal,” he said. “It was the only deal.”

Then, the tax collectors started calling.

Shidler, a 37-year-old fire sprinkler installer, is one of a handful of Casa Linda buyers in Cameron and Hidalgo counties who now say they are stuck with unpaid tax bills on their properties that the company failed to disclose before closing on the homes.

On Monday, the Texas Attorney General’s Office filed suit against the business’ parent company Grande Valley Homes, alleging it engaged in deceptive trade practices that could put homeowners like Shidler out on the street.

“I was never told there were any back taxes,” Shidler said. “Any taxes I owe should be from the point that I took ownership of the property.”

An attorney for Casa Linda declined to comment on the specific allegations in the suit or on Shidler’s case, saying the company had not had a chance to review the allegations.

“We have talked to the Attorney General’s Office, though,” said lawyer Emerson Arrellano. “We’re trying to come to an agreement.”

Since it’s founding in 1998, Casa Linda quickly grew to become one of the largest residential developers in the Rio Grande Valley, building thousands of new homes each month at its peak.

Their business model capitalized on the booming local housing market of the early 2000s and the modest means available to many of the area’s first-time home buyers.

By building in bulk and pricing many of its homes at under $100,000, the company was able to offer in-house financing to potential buyers who normally wouldn’t qualify for mortgages from traditional lenders.

But that same financing plan left many of its customers unknowingly saddled with pre-existing debts that the company failed to pay. Typically, these liens would have been uncovered by a title company but went undiscovered by home buyers because Casa Linda handled most of its payment plans internally, Attorney General Greg Abbott said in a statement released Monday.

“Purchasers were not warned about the undisclosed liens by title companies, because Casa Linda did not require home buyers to purchase title insurance,” he said. “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.”

Customers like Shidler, with modest incomes and limited access to credit, were perhaps the most ill-equipped to handle the sudden demands for payment that landed in their laps after closing on their homes.

He started receiving collection phone calls from collection agencies seven months after he finalized purchase of his house in December 2008.

“City of Donna, Hidalgo County, Donna ISD. You name it, they owe it,” he said, rifling through a stack of bills totaling $5,000 for taxes owed stretching back to 2007. “None of it has ever been paid.”

Monday’s lawsuit filed in a Cameron County state district court asks the judge to prevent Casa Linda from selling homes that lack clear title or ones not covered by title insurance.

Casa Linda could also face civil penalties of up to $20,000 for each alleged violation of the Texas Deceptive Trade Practices Act.

But all Shidler wants is for the company to pay the money it owes before it’s too late. The latest debt notices sent to him threaten foreclosure on his home.

“I’m stuck between a rock and a hard place,” he said. “I would like for them to get Casa Linda to do what’s right.”

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The Texas Attorney General’s Office urges home owners with information or similar complaints about Casa Linda Homes to contact them online at www.texasattorneygeneral.gov or at 1 (800) 252-8011.

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.

SOURCE: Texas Attorney General’s Office

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Jeremy Roebuck covers courts and general assignments for The Monitor. You can reach him at (956) 683-4437.