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Investor sues county for breach of contract

Copyright © 2019 Albuquerque Journal

Two years after buying a South Valley residential housing property from Bernalillo County, an Albuquerque real estate investor has filed a breach of contract lawsuit claiming the county bungled the deal.

The county, meanwhile, acknowledges its failure to get the agreement approved by the proper authorities, according to court documents. But it argues that the mishap makes the deal void and that it should be able to rescind the sale.

The county is asking a judge to dismiss James Nelson’s complaint, grant permission to rescind the sale and have Nelson pay its legal costs.

Nelson, who bought the 5,860-square-foot property for $163,500 in February 2017, sued the county last month in state District Court in Albuquerque.

His suit says the county neglected to obtain the necessary state-level approval for the sale of the property at 305 Lagunitas SW and last year “took the erroneous position that it was entitled to unilaterally void the agreement.”

The county “is equitably estopped from denying that the Agreement was a valid, binding contract, because the County itself failed to seek legally required approvals for the Agreement, and the County cannot benefit from its own misconduct,” the suit says.

The county also used an after-the-fact appraisal to say Nelson had to either pay $35,000 to “consummate the sale” or show he’d made improvements worth that much, according to the suit.

The county admits it did not follow the proper processes required for the sale of the public property, court records show. It also acknowledged the property was appraised for more than Nelson paid.

But in its response and counterclaim, the county is asking a judge to uphold its position that because the county “inadvertently” failed to get the necessary State Board of Finance OK for the sale, the agreement is void.

“Because the parties did not have a valid agreement, Bernalillo County is entitled to rescind the purchase agreement,” according to the response filed by the county’s contract attorney, Luis Robles.

Nelson, who is seeking undisclosed damages and attorney’s fees, said in an interview he has made improvements to the property and the county’s move to rescind the 2017 agreement is unacceptable.

“(It) just means that everybody just goes back as if this deal never occurred – they get the property back, I get my money back,” he said. “Well, no. You have put me through hell for two years; you’re going to pay damages to me.”

Nelson, a general contractor who buys properties to fix and resell, said he has an interested buyer for the property, but the lingering issues have prevented the sale.

He is currently leasing the property to a church but says he should have been able to sell by now and have the proceeds available to continue buying and flipping properties.

A Bernalillo County spokeswoman said the county wants to continue working with Nelson on a “fair, amicable resolution” and filed a counterclaim “to make it possible to rescind the sale and return the money he paid for the property if the State Board of Finance does not ultimately approve the sale.”

However, spokeswoman Tia Bland did not answer specific Journal questions, including whether it planned to present the deal to the State Board of Finance for approval.

Nelson’s lawsuit is just the latest development in his battle with the county over the site.

The county was granted the property in 2010 and intended to use it as a recovery facility for homeless women. However, that idea died amid neighborhood opposition, prompting the county to move toward a sale.

Nelson told the Journal last year that he discovered after the purchase that restrictive covenants on the property limited its use to supportive housing for homeless people with drug addictions or mental illness and it could be subject to a $750,000 lien if utilized otherwise.

Nelson contends the county did not disclose that information prior to the sale, a claim the county has denied. The purchase agreement between Nelson and the county did not mention the restrictions.

Nelson said he has subsequently worked with the U.S. Department of Housing and Urban Development to release its restrictions and covenants on the property, but he remains frustrated with his dealings with the county.

Nelson also said the county did not disclose that the property has a septic system, which it does. The county has acknowledged the septic system and said in its court response to Nelson’s suit that it does require repairs.

“The thing is that they put me in a really bad spot; I’ve had to sell my own house because of this,” Nelson said. “I’m running out of money; I’ve actually run out of money a few times over the last two years.”

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