HUD No. 07-104
July 11, 2007
HUD ANNOUNCES SETTLEMENT WITH FAIRFIELD RESORTS OVER ALLEGATIONS OF ILLEGAL MARKETING AND SALES TACTICS
Agreement follows numerous consumer complaints against land developer
WASHINGTON - The U.S. Department of Housing and Urban Development today announced a formal settlement agreement with Fairfield Resorts, Inc. following an investigation into alleged misrepresentations and failures to make proper disclosures to consumers dating back to the 1970s. The agreement announced today involves hundreds of consumer complaints that Fairfield failed to complete promised utility and street improvements for lots in a development in Cumberland County, Tennessee known as Fairfield Glade.
Based on the findings of an investigation under the Interstate Land Sales Full Disclosure Act, HUD alleged that Fairfield failed to meet a 1998 deadline to make water, sewer, electric and street improvements, despite having more than two decades to do so. HUD also alleged that Fairfield marketing and sales agents engaged in various misrepresentations regarding the investment potential of certain lots.
Under the terms of the settlement, Fairfield agreed to offer certain original purchasers a full refund of the price of their undeveloped lot. Other purchasers who received partial refunds through a separate settlement with the Tennessee Attorney General may also receive the difference between the price they paid for their lot and the amount they received under the Tennessee settlement. HUD estimates that the potential for consumer relief will total more than $2.5 million. In addition, the company will make a $375,000 payment to HUD, including $75,000 to reimburse the Department for the cost of its investigation.
Many consumers complained that they were unable to build on their lots due to Fairfield's failure to complete the necessary infrastructure improvements. As further relief under the settlement, Fairfield agrees to permit owners ready to build to exchange their lots for similar lots served by utilities and improved roads.
"This settlement should signal HUD's strong intent to hold developers to their contractual promises, even those made a number of years ago," said Brian Montgomery, HUD Assistant Secretary for Housing and Federal Housing Commissioner. "The law clearly requires certain developers to provide consumers with an accurate property report and prohibits deceptive or misleading statements in the sale of land."
The Interstate Land Sales program protects consumers from fraud and abuse in the sale or lease of land. In 1968 Congress enacted the Interstate Land Sales Full Disclosure Act and requires land developers to register subdivisions of 100 or more non-exempt lots with HUD and to provide each purchaser with a disclosure document called a Property Report. The Property Report contains relevant information about the subdivision and must be delivered to each purchaser before the signing of the contract or agreement.