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Shrill complaints; rather than tough it out in court, The Maumelle Co. agrees to a quick settlement.

Shrill Complaints

It's been two years since John W. (Jay) DeHaven and Michael Todd purchased the Maumelle development and began using a hybrid of the controversial direct-marketing high-pressure technique so effective in selling time-share resort properties.

While real estate agents, competitors and more conservative business executives criticize tactics used by DeHaven, Todd & Co., there have not been any formal complaints filed with the Arkansas Real Estate Commission until recently. Two related complaints were filed March 23.

The complaints against The Maumelle Co., a subsidiary of DeHaven, Todd & Co., were resolved within 30 days, and a related lawsuit was also dismissed. Although all parties are somewhat satisfied, a look at the case is a reminder of what can go wrong in a real estate transaction.

George Peters, a Little Rock builder and owner of Martin McDaniel Realty, charged DeHaven with "blatant misrepresentation" and "promising anything to sell a lot."

DeHaven declines to elaborate publicly on the complaints because he says they are settled and he is bound by an agreement not to talk about them.

He does say, "Rather than litigate it, we decided to settle. It doesn't mean we're wrong, just that we didn't want to screw with it."

A Good Record

"Thirteen hundred lots sold in two years and only two complaints with the Real Estate Commission - I think that's a good record," DeHaven adds.

Like many of the 260 couples a week who toured the project at the height of its marketing campaign and received "the Maumelle treatment," Mark and Denise Frerichs were captivated by the sales pitches. They decided to move from their southwest Little Rock home, buy a lot and build in Maumelle.

Mark and Denise took the tour on July 13, 1989. Despite encouragement from Barbara Burckhart, a Maumelle Co. sales representative, the Frerichs said they were not interested. That is, until she said the Maumelle Co. would buy their house on Republic Lane at its appraised value without charging any fees or closing costs.

The couple then plunked down $250 of a $1,650 down payment on a lot costing $16,500. The balance would come in installments and the $11,387 in equity on their Republic Lane home taken in trade for Lot 43, Woodland Heights Addition, Maumelle (street address, 36 Vantage Drive).

A Pleasant Surprise

With fees between 10 percent and 20 percent charged by other real estate companies on trade-ins, the couple was surprised to learn that the Maumelle Co. signed a contract that did not include a fee.

The couple engaged George Peters to build their home. After examining their contract with the Maumelle Co., he told them the offer was conditioned upon the Maumelle Co.'s ability to assume thier existing loan on the Republic Lane home. He also told them The Maumelle Co. could not assume the loan, which they obtained through a state bond fund to help people buy their first home. (See accompanying article on loan assumptions.)

Peters discussed the problem with Neal Bachman, another Maumelle Co. sales representative, who told him development company officials knew it could not assume the loan, but planned to sell it on assumption to a qualified buyer. If the house could not be sold, The Maumelle Co. would pay cash for it, Bachman said.

Peters then said before he agreed to build the home, he would need a signed offer from The Maumelle Co. to buy the Frerichs' house for cash.

Consequently, on Oct. 12, Bachman and Mary Peyton, supervising broker, signed an agreement to pay $60,000 in cash for the house. Peters began construction about Nov. 1.

The Frerichs closed the deal on their Maumelle lot on Oct. 25, and The Maumelle Co. retained a second mortgage on thier Republic Lane house.

Balking Near The End

Their new home was completed, and the builder was prepared to close Feb. 7, but then Maumelle Co. officials started to balk.

"Mary Peyton said she had forgotten she signed a cash offer, and couldn't believe she had, but since she had signed it they would honor it because Maumelle Co. `always honored their contracts,'" the Frerichs noted in their complaint with the Real Estate Commission.

Peyton set a tentative closing date, but never confirmed it. About seven days after the date had passed, the Frerichs went to her office. "She informed us that the owner of Maumelle Co., Mr. DeHaven, had no intention of honoring the contract. She brought up that the [Republic Lane] house had been leveled and had settling problems as many houses in southwest Little Rock do," the complaint stated. Two years ago, the couple spent $1,800 to reinforce the foundation.

"Maumelle Co. inspected the house thoroughly before they made the offer to me, and as long as I was paying them my money to buy their lot, there was no problem with my house," the couple said in their complaint. "However, when it came time for Maumelle Co. to spend their money to buy my house, problems began to arise."

"In conclusion, I have been lied to, misrepresented, misinformed, and several other adjectives I do not care to print by Mary Peyton, Neal Bachman and Barbara Burckhart from the beginning to the end of this entire transaction," according to the couple's complaint.

Mounting Losses

Peters, who said delay in closing cost him about $30 per day, also filed a complaint with the Real Estate Commission. He says he never would have built the home without the offer from The Maumelle Co. to pay cash for the Frerichs' previous home. Excerpts from his complaint are blistering.

"I did make the mistake of assuming that Maumelle Co. was represented by honest and ethical agents, brokers and owners," he said in his complaint. "In all my [21] years of experience in the real estate industry, I have never seen a real estate company misrepresent their intentions to their client more openly, more blatantly or with more total disregard for people's feelings and the resulting monetary damages.

"If Mr. DeHaven and his crew can get away with this type of deceptive selling and bargaining, if they can walk away from a valid contract and laugh at a buyer and say, "Sue us. We'd rather take our chances in court," then I do not need a real estate license in the state of Arkansas. I would feel ashamed to be included in the same profession," Peters stated in his complaint.

Following a lawsuit before Judge John Ward in Pulaski County Chancery Court, where the Frerichs sought to force The Maumelle Co. to perform as they allege it had agreed, the matter was settled. On April 20, the couple closed on the house, withdrew their complaint and dismissed the lawsuit.

The Maumelle Co. paid $60,000 in cash for the house, which DeHaven and his wife, Robin, later bought personally. He plans to rent it out, while trying to sell it.

PHOTO : VANTAGE POINT: Lot No. 43, Woodland Heights Subdivision, Maumelle, was the focal point of a complaint filed with the Arkansas Real Estate Commission against The Maumelle Co., which settled quickly. Map courtesy of The Maumelle Co.
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Article Details
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Author:Kern, David F.
Publication:Arkansas Business
Date:May 7, 1990
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Next Article:Assuming pitches.

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