Nichols Land Company took payments for land, didn’t tell residents that banks were foreclosing
WASHINGTON, D.C. – June 6, 2013 – (RealEstateRama) — Raleigh: A North Carolina company that nearly cost more than 20 Surry County residents their homes has been barred from selling real estate in installments, Attorney General Roy Cooper announced today.
“People who wanted a place of their own made payments in good faith but almost lost their homes anyway,” Cooper said. “We work to stop deceptive land deals to keep consumers from getting hurt.”
Cooper alleges that Nichols Land Company misled consumers who entered into installment contracts with the company, promising them that they would own the property in time but then borrowing against it and defaulting on those loans. As a result, more than 20 consumers nearly lost their homes to foreclosure.
Under a judgment approved by Wake County Superior Court Judge G. Wayne Abernathy on Tuesday, Nichols Land Company (Nichols) and its managers, James A. Nichols, Samuel J. Nichols, Roger L. Nichols, and Tina Nichols, are permanently barred from selling real estate through installment sales. The court order prohibits the defendants from any property sales where the consumer agrees to pay the purchase price in five or more payments while the defendants retain title to the property. If the defendants violate the order, they will have to pay $200,000 in civil penalties.
As outlined in Cooper’s complaint, Nichols began offering Surry County land for sale through installment contracts starting in 2000. Under these contracts, consumers were told that if they put down a non-refundable deposit, paid monthly installments, and paid the annual property taxes to Nichols rather than to local government, they would eventually own a piece of property after a period of years.
Cooper contends that in 2007, Nichols borrowed a total of $600,050 from two banks, using the land it had supposedly sold to consumers as collateral. Nichols continued to market and sell properties even after taking out loans against them. When Nichols failed to repay the loans, the banks began to foreclose on the properties.
As alleged in court filings, Nichols continued to accept payments from buyers and never informed them about the impending foreclosures. Many buyers were already living on the properties and had spent their own money to improve them by putting in wells, septic systems, foundations and driveways. Consumers would have lost their homes—and the money they’d spent buying and improving the property— if the banks hadn’t agreed to extend them credit to prevent the foreclosures.
“A home is the biggest purchase most of us will ever make,” Cooper said. “Before you agree to any real estate deal, do your homework carefully.”
To avoid problems with land installment sales, the Attorney General’s Office recommends that consumers:
Request that the seller disclose all information about the property that is required by state law so that the consumer is aware of any problems with the property.
Ask if there are any liens, mortgages or other encumbrances on the property and then check public records available through the county Register of Deeds to confirm.
Make sure that the contract is filed with the county Register of Deeds to prevent the seller from taking out loans against the property.
Ask for an annual accounting of payments and check it carefully to be sure it is accurate.
Remember that you must make every payment on time before you own the property. Late or missed payments can result in losing all of the money you’ve invested in the property.
To check out a company or file a complaint against one, consumers can call1-877-5-NO-SCAM toll-free within state. Consumers can also file a complaint online at www.ncdoj.gov.