Land-sales firms see image take hit
Posted on Tuesday, June 24, 2008
Officials from companies that use installment land-sales contracts say developer Wayne Watkins’ recent troubles are casting a bad light on other businesses that sell land this way.
The unregulated contracts that investigators say Watkins abused are commonly used throughout Arkansas, usually for rural or retirement property.
“When a fellow like Wayne Watkins does what he’s alleged to have done, it’s not good for any of us who try to do it the right way,” said Neff Basore, senior vice president of Cooper Communities, which built retirement communities in Bella Vista, Cherokee Village and Hot Springs Village.
Watkins got his start in the real estate business selling land in Cherokee Village in the 1970 s for developer John Cooper, Basore’s grandfather. Watkins, now 59, went out on his own in the 1980 s, developing family and resort lots along the Spring River.
He sold hundreds of parcels of land, often financing the deals himself. Buyers signed installment land-sales contracts and were promised deeds once they made the last payment. Until then, the land remained in Watkins’ name.
Many of Watkins’ customers lost their money and the land they thought they were buying when he defaulted on $ 2. 6 million in loans he obtained by using the land he was selling as collateral.
Because Watkins did not record the contracts at the courthouses in Sharp or Fulton counties, there was nothing showing lenders that buyers had a legal interest in the land.
Last week, Attorney General Dustin McDaniel sued Watkins and some of his business associates, saying they had violated the Arkansas Deceptive Trade Practices Act. Watkins, the suit read, had “engaged in a concerted scheme to knowingly deceive both consumer purchasers and banks to keep his financial house of cards from tumbling.” Deputy Attorney General Jim DePriest warned consumers Monday to be wary of installment land-sales contracts.
“It’s not a consumer-friendly method, although it certainly has benefits for the seller,” he said. “Avoid buying property this way if you can.” Watkins, who has been living in Mexico and selling real estate there, according to his attorney, is wanted on a Sharp County warrant for one count of theft of property relating to his land deals.
The FBI also has gone through all the complaints people filed about Watkins with the attorney general’s office, DePriest said Monday.
State Sen. Paul Miller, D-Melbourne, said he likely will introduce legislation during the next session to regulate the types of contracts Watkins used.
“This will be No. 1 on my radar screen,” Miller said, adding that he wants to talk to real estate agents from his area before crafting the legislation.
Regulating these types of contracts could be an added safeguard for prospective property owners, Miller said.
“We need to be sure they get what they think they are getting,” he explained. “I think honesty is wonderful, but I don’t think we better leave it to that anymore.” As it is now, there is no state law requiring these types of contracts be recorded at the courthouse in the county where the land is sold. Title searches also are not required.
Some people who sell land using these types of contracts say they are open to regulation.
“I would definitely like to see something put together to stop [this ] kind of thing from happening,” said Matthew Demas, associate manager of SunSpring Properties in Cherokee Village. “This area just has so much potential for growth, and this sort of thing just turns people off from it.” Demas said regulating the contracts would show customers who may be a bit leery that these types of contracts are legitimate, though he and others point out that many people use these contracts without any problems.
Unlike Watkins, Demas said his company sells only land that it owns outright.
“It’s free and clear,” he said.
He said his company typically does not record its contracts because it is not required to do so, and it would have to pay a fee for each page of the contract.
Foreclosure records and other documents show that Watkins’ land sometimes had one or more bank liens that buyers never knew about because they did not conduct title searches on the property. At least one buyer told the Arkansas Democrat-Gazette that Watkins’ salesmen discouraged him from having a title search.
Cooper Communities also sells only land it owns outright, Basore said. Cooper attorney Bill Kennedy said the company generally records contracts with county clerks.
Demas said he is familiar with the land that Watkins owned in north-central Arkansas.
“There’s a lot of beautiful properties up there, and nobody can really do anything with it,” he said. “It’s just all wrapped up in some legal limbo.” The attorney general’s office is trying to sort out everything that happened with Watkins ’ properties, and foreclosure cases are ongoing.
DePriest said Monday that his office is urging victims of Watkins who have not stepped forward to do so now.
“We want to hear from people, and we want to hear what their experiences were,” he said Monday. “That’s where all this is coming from. The more people we hear from, the better.” Those wishing to file complaints or talk to an investigator in the attorney general’s office can call the office’s consumer hotline at (800 ) 482-8982.
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