Attorney General Ken Paxton Takes Legal Action Against Colony Ridge Over Alleged Fraud Leading to Problematic Real Estate Expansion

Texas Attorney General Ken Paxton has initiated legal action against the Colony Ridge development in Liberty County. The lawsuit accuses the development of engaging in deceptive trade practices, committing fraud in real estate transactions, and violating other Texas and federal laws.

Colony Ridge is a vast real estate project located northeast of Houston, which has seen rapid expansion in recent years. In a letter dated October 2023, sent to Members of the United States Congress and other Texas leaders, Attorney General Paxton raised concerns about the development’s swift growth. He highlighted that the development seems to be attracting and facilitating the settlement of undocumented immigrants in Texas, causing strain on neighboring cities and school districts.

Following an extensive investigation, the Office of the Attorney General discovered that the developer engaged in numerous deceptive sales, marketing, and lending practices. These practices have been crucial to their business strategy.

The lawsuit details how Colony Ridge’s business model heavily relies on cycling land purchasers through a process that often leads to foreclosure. Specifically, the development targets individuals born abroad and Hispanic consumers who have limited or no access to credit. They lure these consumers with the promise of affordable, ready-to-build land and financing options that do not require proof of income. Furthermore, Colony Ridge has been found to misrepresent the conditions of the land and the community. Often, the promised infrastructure, such as sewer, water, or electricity, is absent. These misrepresented conditions prevent the buyer from effectively utilizing the land.

Once these issues come to light, Colony Ridge proceeds to foreclose on the property and repossess the land. They then sell the same plots to new buyers, deceiving them with the same false promises. It has been revealed that former employees were instructed to avoid selling to customers who could speak English or did not appear to be of Latino or Hispanic heritage. The development’s predatory practices have resulted in a foreclosure rate that is 50 times higher than the national average in 2023.

Attorney General Paxton has stated, “Colony Ridge has blatantly violated Texas law. The development has profited from targeting consumers with fraudulent claims and predatory lending practices.” He emphasized that the deceptive practices have led to significant and unjust harm. The surrounding communities have paid a heavy price for the scheme that has enriched the developers of Colony Ridge.

For those interested in reading the legal filing, you can find it here.