A lawsuit containing factual allegations consistent with Hayman's research regarding the Shahan Prarie development will proceed against several UDF entities, the Fifth District Court of Appeals of Texas ruled on May 29, 2020. Megatel Homes III, LLC sued United Development Funding, L.P., United Development Funding II, L.P., United Development Funding III, L.P., United Development Funding IV, and United Development Funding Income Fund V.
“Megatel asserts that neither Shahan Prairie nor the Buffington Entities took any significant steps to develop the land made the subject of their contracts. Megatel further asserts the UDF Parties did not provide BHM, LAMP, or Scenic Loop with sufficient funds to perform their development obligations.”
Hayman’s research raises questions concerning UDF IV’s latest stated financial position and disclosures.
Hayman’s research raises questions about Alpha Ranch, a UDF-funded residential development project, and examines the relevant debt versus equity considerations, which could create significant tax consequences.
Hayman’s latest research examines UDF’s problematic past (and present) in its case study of Northpointe Crossing, a residential real estate development in Anna, Texas.
UDF’s Ponzi-like real estate scheme continues to unravel as it tries to create liquidity through the dissipation of collateral to repay various creditors or to satisfy other financial obligations.
Hayman's latest research considers the restrictions placed on REITs, the tax consequences of income derived from “prohibited transactions” and case law that provides guidelines for determining the “debt versus equity” question.