Foreclosure order delays completion of Little Rock court case against troubled housing complex
A Little Rock apartment complex with a history of code violations is facing a foreclosure order in addition to city and state legal action, Deputy City Attorney Alan Jones said Thursday in city environmental court.
The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, owns Big Country Chateau’s mortgage. It filed a foreclosure petition in February against Apex Big Chateau AR LLC, Oron Zarum and Carpet Tech Inc.
A Pulaski County circuit judge ordered the foreclosure on the Colonel Glenn Road complex on May 2, giving the mortgage lender time to assess the property before selling it. The mortgage bank has reached out to the city for help relocating the tenants at the complex, Jones told Little Rock District Judge Mark Leverett.
Freddie Mac currently has no plans to sell the property, a spokesperson said Thursday afternoon.
Fewer than 20 of the 151 units at Big Country Chateau are currently occupied, said Neil Sealy, a tenants’ rights organizer with Arkansas Community Organizations.
City code enforcement has been pursuing a case against Big Country Chateau since 2019 in Little Rock District Court. Code violations at the complex have included mold, broken windows, exposed electrical wiring, scattered garbage and smoke detectors that do not work.
Life and safety violations in rental housing include a lack of or malfunctioning electricity, hot and cold running water, plumbing system and heating and cooling system, among other things, according to court documents.
These minimum standards did not become required by state law until 2021. Critics, including Sealy, have said the law does not have enough teeth.
In February, Attorney General Tim Griffin appointed Sal Thomas, a senior official at a Houston real estate firm, as a third-party receiver to collect rent, pay utility bills and make repairs at Big Country Chateau. Thomas and his attorney, Cody Kees, were not present at Thursday’s court hearing.
In a recent filing with the circuit court, Freddie Mac accepted Thomas as receiver rather than seek appointment of one of its own.
Thomas is not going to file eviction proceedings against any tenants, Jones said, and the city is looking at ways to help tenants relocate.
“The receiver is… just trying to keep everything in kind of a stasis, respond to maintenance requests and keep [the complex] running as much as possible,” Jones said.
He and Leverett agreed to set another court date for June 1, when Jones said he expects to have more information about the status of the foreclosure.
The complex’s legal troubles
Big Country Chateau, its holding company and its New Jersey-based parent company, Apex Equity Group, are all defendants in an ongoing consumer protection lawsuit. Former Attorney General Leslie Rutledge filed the suit in August 2022, and Griffin took over the case in January when he took office.
The lawsuit stemmed from apartment management’s nonpayment of utility bills, leading Entergy Arkansas and Central Arkansas Water to plan to cease services at the complex on Sept. 1, 2022.
Accepting consumers’ money for a previously agreed-upon purpose, such as paying utility bills, and not using the money for that purpose is “a deceptive, false, and unconscionable business practice” that violates the Arkansas Deceptive Trade Practices Act, the Pulaski County Circuit Court lawsuit states.
The foreclosure order against Big Country Chateau “will not stop” the lawsuit, Griffin said in a statement from his office Thursday.
“The owners must be held accountable for their violations of the Arkansas Deceptive Trade Practices Act and the harm they have caused,” Griffin said.
Big Country Chateau management paid off its $70,000 debt to Entergy Arkansas and made “arrangements” with Central Arkansas Water before Sept. 1 last year, so both utilities continued to provide services to the complex until they sent notice in January that they intended to cancel again.
Griffin spoke to tenants and their supporters at a rally at Little Rock City Hall on Jan. 26, saying he had asked Entergy and Central Arkansas Water to postpone the shutoffs while his office worked on legal remedies.
Big Country Chateau residents at the rally said their struggles include unsafe living conditions. Other tenants previously told the Arkansas Advocate that management often has not responded to maintenance requests and “scrambled” to do so after the first nonpayment of utility bills became public knowledge in July.
The apartment complex racked up several code violations after a city inspection in late July 2022. Management pleaded no contest to the violations at an October hearing, where Smith said 10 units were inaccessible for maintenance and repairs.
Seven units were left in November, and Smith said management was considering filing civil eviction actions against the residents of those units as a last resort to gain access but hoped it would not be necessary.
In early February, Pulaski County Circuit Judge Cara Connors froze the assets of Big Country Chateau, its holding company and Apex Equity Group. Connors later lifted the asset freeze at the request of Sylvester Smith, the attorney representing Big Country Chateau’s owners at the time, but she also granted Griffin’s request to appoint a receiver at the property.
Another city inspection on Feb. 7 revealed more code violations at Big Country Chateau. In March, Leverett issued $31,950 in fines and court costs to the complex owners. The 30 violations received the maximum fine of $1,000 each.
Later in March, Leverett, Jones and Thomas agreed that the court should handle all pending cases and fines against the property at once. They said they expected the cases to close in April.
The April court date resulted in another delay until Thursday.