Austin real estate investor Nate Paul faced foreclosure on properties in Austin, Plano and San Antonio this summer from lenders seeking to collect a combined $20.5 million in delinquent debt.
But foreclosure sales of the properties scheduled for Aug. 4 didn’t take place after a rushed written legal opinion — ordered by Texas Attorney General Ken Paxton under unusual circumstances and dated Aug. 1 — rendered such sales more difficult to hold.
The American-Statesman first reported Thursday on Paxton’s Aug. 1 opinion and a scheduled Aug. 4 foreclosure sale of a Paul-controlled real estate entity based in Austin that subsequently was called off.
Paxton’s opinion came at a time potentially more opportune for Paul and his company, World Class Property Co., than previously known, however.
A second Paul-controlled real estate entity based in Austin was slated for an Aug. 4 foreclosure sale, according to court documents, as were an entity with property in San Antonio and another with property in Plano. None of the sales went forward as scheduled.
An attorney for Paul said he wasn’t available for comment Friday. Paxton’s office didn’t respond to requests for comment.
Paxton’s relationship with Paul, who donated $25,000 to Paxton’s reelection campaign in 2018, has emerged at the center of a civil war that recently erupted in the attorney general’s office.
Seven senior Paxton aides filed a criminal complaint against their boss — alleging abuse of office, bribery and other wrongdoing — that they say stems from his dealings involving Paul. Paxton has called the aides “rogue employees” and said the allegations they’ve made against him are false.
Paul, 33, has had a fast rise in the real estate industry, growing World Class into one of the nation’s largest privately owned real estate companies after founding it in 2007. More recently, however, he has faced a spate of bankruptcies, legal skirmishes, loan defaults and foreclosure notices — as well as a federal investigation that led to searches of his Austin home and headquarters in August 2019.
Paxton’s legal opinion this August concerning foreclosures, which is dated Aug. 1 but was made public on his agency’s website Aug. 2, is among the actions that have raised red flags with some of his aides regarding his relationship with Paul.
The informal opinion, issued on the weekend instead of a weekday as usual, didn’t bear Paxton’s name, but Paxton ordered it to be completed before the weekend was over and paid unusually close attention to its progress, two senior agency officials told the Statesman.
“He said, ‘Do it, and get it out this weekend,’ ” one of the officials said.
In setting and enforcing a compressed deadline for the opinion, Paxton showed an unusually high level of interest for a typically hands-off agency leader, the officials said.
The opinion said that property foreclosure sales shouldn’t proceed if potential bidders would be excluded by crowd limits imposed by state or local rules in response to the coronavirus pandemic. At the time it was issued, Austin was operating under emergency rules that said no more than 10 people “may stand or gather together,” and that those in control of a site must enforce limits on gatherings to 10 or fewer.
Two of the Paul-controlled real estate entities that were slated for foreclosure sales Aug. 4 own Austin properties — WC 707 Cesar Chavez LLC and WC 4th and Colorado LP.
Another entity, WC Alamo Industrial Center LP, owns property in San Antonio, and a fourth, WC Custer Creek Center Property LLC, owns property in Plano.
Amplify Credit Union — which held a $2.7 million delinquent note on WC 707 Cesar Chavez, a $2.7 million delinquent note on WC Alamo Industrial Center and a $6.5 million delinquent note on WC Custer Creek — had sought the Aug. 4 foreclosure sales on those properties.
An Amplify executive declined to comment.
But court records indicate foreclosure sales on those three subsequently were rescheduled for Sept. 1, although it’s unclear whether they took place. Later in September, Amplify sold the notes it held on WC Alamo Industrial Center and WC Custer Creek.
WC 4th and Colorado filed for Chapter 11 bankruptcy protection Aug. 4, before the scheduled foreclosure sale on that property was to take place. Attorneys for an entity called Colorado Third Street LLC, which is owed $8.6 million on the property and had been pushing to foreclose, didn’t return calls seeking comment.
Staff writers Shonda Novak, Chuck Lindell and Tony Plohetski contributed to this report.