About To Lose 30+k
Hi, some of you who have been following my posts already know some of the specifics, but if you don't, please read the topic "catch 22", and be sure to read the second page. I really need professional advice here, so please take the time to share your wisdom and insight. Of course I will also be speaking to my attorney, but after you read this, you'll know why that might not get me anywhere.
I've had some new developments tonight. I was able to contact the previous owner of that 6 unit I began buying a few months ago. Had a very long and sad conversation with him. He bought this place in 2001. Just after he bought it, one unit, which is technically a condo, I guess, because it has it's own tax number, was condemned for a broken step (I think). Soon, the city arrived and condemned the rest of them - not because there was something wrong with them, but because they were conected together with the condemned one. He put about 100k of his own money into it, new elec., new roof, new plumbing, kitchens, lots of stuff. City wouldn't lift condemnation. Everything he did, they found something else wrong with it. Finally, when in a city council meeting, he was told he must now "remove all of the brick from the outside of the building, and replace it." Why? Because the building was leaning and looked twisted in one corner from settling, something that probably occured decades ago. At this point he gave up, told the city they could have it, told the bank he could not pay for the building because the city would not allow him to open it, and that they could proceed with the forclosure process. When I asked him if he had an attorney, he answered that he had conversations with one, and that he was given advice for working with the city, but had not actually hired him because at this point he had run out of money. Then I asked him the name of this attorney. I don't sit here at night and make this stuff up, you guys - It was the same attorney I hired. Now, if you recall, I've only closed on two of these units, and if I walk now, I lose 30k, but not what I might if I closed on the others. I also asked if he had informed the bank who had his mortgage about the situation with the city. He had, but not surprisingly, they said it was entirely his problem. The reason I asked about that was because I wanted to know if the bank was aware of this situation when they sold it to me. Unfortunately, and again, not surprisingly, there is nothing in writing. I don't know if I should call it quits and lick my wounds, try to get something very, very specific in writing from the city, or try to sue the bank for my money back. Let me know, I need you guys. Zach:evil:
I give ya thumbs-up for asking others for some 'ideas' or 'brainstorms' so to say.
But it sounds like your resorting to this board for what to do OR what you should do; and this is BAD!!
That's one hell of a complicated situation from the sounds of it, all I could tell ya for sure is the local gov. can keep ya shut down and make your life hell..
I'll get to the part you want, the solution!!
Oh yes, there is a remarkable solution here!!
GO PAY AN ATTORNEY; GO TALK WITH ATTORNEY; ASK ATTORNEY THESE QUESTIONS!!!
An attorney will tell you and HELP you (at a cost) to fight the city, take care of the issues, and get said complex habitable again..
As for your 'sue the bank' idea, my 2-cents and opinion only is:
1) bank has more expensive attorneys and endless money to pay for litigation.
2) bank usually has all the documents/paperwork in their favor (i.e. forms, contracts, etc.)
3) your chances of beating the bank in court and getting damages are "KINDA" slim in my opinion; but if you have the cash to litigate with the bank in the HOPe OF getting something, go for it..
Litigating with local gov. over the habitability, bldg codes, ect. is probably worth your time and money (goood opertunity here to short sale lender, and buy all units el cheapo!!!)..
AGAIN, the secret solution is, GET AN GOOOD ATTORNEY!!!!!!!!!
Chris
I do have an attorney, and he came highly recommended from two unrelated sources. I don't have any problem paying him if he can get the job done, but if the city is h*ll bent, for whatever reason on destroying this property, I won't be able to stop them by meeting code requirements. Of course I can do most of what's necessary, but when it comes to things like stripping the place of all it's brick? The floor in the basement isn't perfectly straight either, so what if I have to fix that? And if I fix that, well, then there probably won't be enough head clearance, etc, etc, etc. I'm just saying that if the city wants to work with me, I know they can, but if they don't, I'm not sure any amount of money or any attorney can change that. I'll be speaking to him tomorrow. So yes, I certainly will be speaking with an attorney, but I just thought that in the meantime it might help if everyone brainstormed like you said. Thanks, keep it coming - Z
I just finished a post to Catch 22...but here is the gist of it: Try to have a judge grant you the same restraining order the bank had to buy you time to do repairs. Then ask him ( judge) to compel the city to provide the inspection reports and permits in a timely manner - they maybe guilty of some law for failing to provide a service for which you contracted them to do (ie - inspection reports - I am assuming there was a fee). Find out what the neighbors's problem is. Is he in cahoots with the city? Have a conversation with him(and a witness) explaining that your rehab of the property will improve the view for him and the value of his property. You need a great attorney! This property sound so intrigueing that you almost want it for the fight. The bank may be on the hook for misrepresenting the property as a fixer upper when there wasn't a prayer's chance the city would allow repairs. Food for thought. Best of luck.
Sounds like a tuff situation. You may want to call some structural engineers to have them come out and review the so called foundation and brick problems. It may cost a little money but they may have some insight on how to fix it without tearing it down. Your local gov is there to uphold buidling codes and ensure public safety. They are in no means "GOD" of the codes. They may act like it but you still have rights. If you are taking the correct steps to fix the problem then they can only delay you from getting through this. If the structural engineer provides you a report saying you can make some repairs and it will be safe then take it to the city. If they say no then appeal it. I would make sure you find an attorney well versed in construction and real estate. You may find someone who has represented others in the same situations afterall you can't be the first guy the've picked on.
I would sit down and figure out the cheapest and most effective way to tackle this and how much more money you are willing to lose. I would not give up easily if I stood to lose 30K.
KEEP UP THE FIGHT
TBARBER
The previous owner had the foundation and exterior walls inspected. The verdict? The building was sound. The city's view? It's crooked, and we want it fixed. So the the previous owner found a company who could (please forgive me for the lack of detail here) install some rods through the walls and into the main supports of the building. The city argued that this process might keep the walls from moving further, but would not restore them to being straight. Finally they agreed, only to say "sorry, these "rods" are not an approved building material". That sounds like an awful lot of BS for a city council, but that's what he told me, and after talking to him on the phone for 45 minutes, I believe him. Beth/Tbarber, I responded to your other comments on the other post, but basically, I already did those things with the neighbor. He told me he's been looking at if for 32 years, and just wants it gone, period, end of story. I agree that he might know someone, but what kind of pull can this guy possibly have? He's lived in this rundown hole of a city for 32 years, and somehow he has the city attorneys office and city council in the palm of his hands? It doesn't make sense. I think I'll do as you guys suggest, and see it I can get some sort of agreement before moving any further ahead. Mostly, my concern is with them wanting me to bring things to current code that just can't be done with a fifty-three year old building due to it's basic construction. Zach[ Edited by Zach on Date 11/12/2003 ]
Ya know, I just realized that I might have another option here. Cancel the sale on the other four units. Now the bank needs to either find new buyers, which would mean that the city and banks both will be dealing with 2 or even 3 idiots instead of one (me), or make them work harder at helping me deal with the city. That would double or triple my leverage with the city, and if the place does ever get finished, I'll still come out ahead with a duplex that's worth about twice what I paid. I might lose the 4k in deposit money, but that's better than 60K. Any thoughts? At this point, I'm just trying to get out with my a** in one piece. If I can figure out a way to do the whole deal, I'd still like to. Zach[ Edited by Zach on Date 11/12/2003 ]
You have an interesting point. It may work. However, couldn't you approach the engineer who checked the walls and convince him to file a slander suit against the city for claiming he is unknowledgable about his profession? After all the state licensed him. Turn city against state.
Also, if the neighbor's house is an eyesore, file a complaint against him...two can play at this. Don't get me wrong , I am a kind person to a fault ( mostly naive about the goodness of others), but don't mess with my livelihood!!! Go for it with all you can muster! Keep us posted.
I am by no means an expert but I thought I might share an idea. What if you were to talk the city into making the unit legally livable but sign a contract of some sort with the city that no one would occupy the building while its being brought up to code. That way you could get a equity loan for the repairs and wouldn't need a hard money loan or tieing your personal residence to the property. In a sticking situation like that I would be more than scared to potentially lose my house over this. This might not work but I just thought I would try to lend some support.
Zach, you're getting a lot of conflicting advice and being sent in circles chasing your tail.
In regard to the bank - did you buy this property "as is"? If you did it is an open and shut case against suing them for anything. Banks deal with this everyday and this isn't the first property like this they have sold. Your state has laws in regard to disclosure and "as is" sales. Any attorney competent in real estate laws will be able to tell you within moments where you stand legally with the bank.
As for ideas in regard to trying to deal with the one unit you have and having leverage with the city, forget it. The city doesn't care one way or the other no matter how many people or owners there will be involved. They have a due process they will follow and any manueverings you do aren't going to change things.
I wouldn't put another dime into the building at this point, I wouldn't close on the other units, unless at this point you are fond of taking money out of your wallet and lighting it on fire. You have way to many issues right now.
At this point the most you may lose is 30k, but the sky is the limit if you keep going. Think about the previous owner, what was his mind set with the first 5k he put into the building and what was he thinking after he threw his hands up after 100k? Looking back he would have given anything to have been smart enough to stop at that first 5k wasted on it. It is for certain that when you look at all the real estate deals in your city over the year as a whole that there are going to be some that are a fantastic opportunity for an investor and there are going to be some that are bad and some that are just plain red flag waiving horrible money pits that no experienced investor is going to touch at any price. I hate to say it but I think you got involved with one.
You need to find out what the city is thinking in regard to this buiding and area. They most likely have some type of long range planning and this building either fits in or it doesn't. They aren't making things up as they go along in regard to codes, and it may seem like no matter what you do they will try to trip you up with more codes, but don't forget the codes are there as the very worst case scenario when it comes to building. They are the least you can do and get by, not the benchmark to shoot for. Good builders over build to codes, just because a code says the minimum you can do is this and that doesn't mean a good builder won't do more than the code. So don't think that codes are just their tool to trip you up, there is a reason for them, and best of all they are all written down and available to you before you buy any property so you can know what you are getting into before you buy it.
I would stop what you are doing, and find out what the city is really wanting to do here, find out a plan A and a plan B and weigh out what each of them will cost you and where you will end up and then go from there. You're caught up way over your head at this point, you need information and real advice from someone who knows from experience, the attorney you have as good as he is, may be not the best one for you since he isn't able to really give you any answers. It may be time to find better legal counsel with someone experienced in these type of matters.
Good luck to you.[ Edited by The-Rehabinator on Date 11/12/2003 ]
How much out of pocket money have you actually spent, that you would lose if you walked away?
It sounds like the city has motives behind what they are doing. I think they want to level the building and build something new...a park, city building, etc.
Find out what they really want to do with the place, and they you can formulate your attack.
Ok, here is todays update. I spoke to my attorney, and he said that because we have begun the legal process (team inspections, restraining orders, communication with the city's law dept via an actual attorney), the process must now be completed step by step, and the city can't just go around doing whatever they want. Here is the plan - get authorization from current owners of the last 4 units to have team inspections. Get inspection reports and get clarification with any grey areas (for example, if they say I must repair or replace missing or damaged stairway treads and risers, does it mean just that - to repair or relace them, or does it mean tear out the 32 inch stairway and install a 36 inch stairway?) The idea is to get them to commit to very specific requirements that can't be bent and manipulated later into meaning something else. Then we have the city provide us with paperwork guaranteeing that they will give me c of o after the work specified in the reports has been completed. He seems to think it will be a fairly straightforward process. I'm not 100% convinced, but he sure sounds like he knows what he's doing. He said the chances of this ending up in court are almost nonexistent, but if it does he will go to bat for me, and that there is no way any Judge is going to allow the city to destroy the building after all of this time, money and actual progress has been invested. For the moment, I don't have much more to lose as long as I haven't closed on the other four. If we can get some rock solid paperwork in order from the city, Then I'll close on the others. I know this seems like awfully risky business, and some of you might be right when you tell me to run. Somebody asked what I'd lose now if I walked - 30k cash for first two units, at least $1200. for attorney, 4k for earnest money on final four units, about $700. for insurance. I guess that's about what I have in it at this point. I'm going to stick it out a little longer and see what happens, but I won't be plunking down any more cash unless I can figure out what's going on here and have some binding agreements with the city.
If the city had a long range plan, why don't they just buy the place themselves? It's not like they can't afford it. And as far as that miserable neighbor's house is concerned - It's the nicest one on the block. .
If I missed anyone's specific question here, I apologize, I'm trying to cover a lot of ground. Thanks everyone for your ideas and insights. Zach
Zach,
You and your attorney should make it a point to attend the next city council meeting. Plead your case there. Maybe you can compel some of them to go to bat for you. The best part is the have to let you speak during public comments even if they refuse to let you get the issue on the docket for discussion. If you can get just one council member to start snooping around, I bet things start getting easier for you. Remember, the best way to defeat an enemy is from within. As for your "retired" neighbor, I'll bet when you show up you will notice him sitting in the front row. Most old retired people who don't keep their property up are spending their time at city council meetings interfering with others who are trying to improve the neighborhood. I watch this go on weekly at the Westland meetings. Give it a shot, only thing it will cost you is a few hundred bucks for your lawyer's time.
Good Luck!
I will speak to my attorney about doing that. As a curiosity, I heard today that the Deputy City Attorney who has been handling this mess left on maternity leave last week. I was also told that this whole 90 day repair business is something that Pontiac has implemented recently. I don't know if the city council will be sympathetic. From what the previous owner said, they wouldn't cooperate with him at all. Of course that's just what he said, after losing the property, and I'm sure he's not too eager to accept any responsibility for any mistakes he might have made. I need to get down there and find out for myself. The truth is, I really don't want to go down there, but I guess the time has come when I have to. This whole process, if that's what it is, is sure a lot different than they told me before I bought the place. Maybe it's time to try to get all the cards on the table. I'll let you know what turns up as soon as I know anything. Thanks again - Zach
Oh, one more thing - There is a council meeting on Thursday, and I think I'll go and see for myself what's taking place.[ Edited by Zach on Date 11/17/2003 ]
Just tell them you'll hard-wire the smoke detectors!!!!!HAHAHAHAHA!!!!!!
( It's a Pontiac thing)
Just had a thought about the ninety day thing, check chain of title to see if it's ever been held by Alliance Realty or a division of. P.M. me if that is the case and I'll explain why.
Boyd - You're right about the smoke detector thing, but there already done! Every GD one of them! Must be...6 hardwired detectors in each unit. Well, the attorney said not to bother with city council unless I just wanted to go. This is the latest - City law office gave me permission to have my other team inspections performed, but instructed the Building and Safety Dept not to issue me any building permits until they say so. Fine with me, at least I'll have that done. So, when I went down there this afternoon to order the inspections, they, of course said that they could give them to me because I was not the current owner and have no written authorization from the owner. I asked them to check with the memo that they were supposed to have received from the law office. They did, and then telephoned the law office to be sure. Get this - after asking my name and verifying the spelling, the law office told them to give me the inspections, even though I didn't own them. Seems they might be cooperating? Lawyer told me to get the inspections, get professional estimate of repairs, put together a new proposal including all of those things, and mail it to him. He'll give it to the new Deputy Attorney (the info about the previous one going on baby leave was accurate), and they will give it to City Council. If they approve it, wonderful, if they don't he goes to court for me. This sounds good, considering, but we must keep in mind that they can still pull a few fast one's with those team inspections, so the saga continues. Still need to find some money for repairs on this place because most of it will soon be tied up in the purchase. Zach P.S. Maybe if I cram some of those smoke detectors down their throats they'll feel more compelled to deal fairly with me - hardwired and all.
Sent by PM:
Wingnut
Zach,
I have read 'about to lose 30+k' and the other post about your situation in pontiac mi regarding your condo's. Have you posted any new updates on the situation? If so what forum. I have been dying to get the latest info. I hope you win against the city, and make a killing.
Thanks, Wingnut
I haven't posted anything new, but the most recent development is that the first two units I had contracts on have "gone back" to the bank that previously held the mortgage. The way that was explained to me was like this (don't know what's fiction and whats fact, only what they tell me) - The bank that originally had the mortgage on the two units in question apparently sold the loan, which I guess is common, to Fannie Mae. Fannie may got tired after months of title problems (we were supposed to close in the end of JULY), and has somehow given the property bach to the first lender to sort out. Now, I am told that the first lender wants to put the place back on the market. Technically, we have been out of contract since the end of July, but they never returned my earnest money, and the contract was kept alive verbally. So now I don't know what will happen. I'm scheduled to close on the second set of two next week. In the meantime, I had to hire a structural engineer to come out and examine the building structure to see if I do indeed need to replace brick, or make some other type of costly repair. That happens on Tuesday. Also, I had my team inspections on the four I do not own, and the inspectors were friendly and gave me no reason to think there was any foul play on their part. I explained to them the situation, and they agreed that someone wants the place for themselves, or at least the land. They said they had no problem with me or my plans to rehab, and that they wish someone would have done it 3 years ago because they are tired of coming out to inspect the same building. They didn't even bother going into all of them because they already knew what they were like. Thanks for your support. I'm pretty determined now to fight them tooth and nail, as I have too much to lose if I walk. Zach P.S. I think I'll move this PM and yours to the forum so others can catch up. Z
Dear Zack,
Now you make sense. Check your attorney, see if he is wired in. Talk to the Building inspector involved, he may tip.
Attend the City Council meetings, and see the play between them. You may find an ally.
I wonder why they did not eminent domain the deal. Probably to save money. See if there is a plan in the works, check with planning. Just barge in tell them you are a student of Urban Planning.
Are you resident in the city? might check in on that.
Be prepared to restrain the hell out of everyone. They may back off. Putting brick on the front of a building is a little tricky, I did one twice. Last time I bolted in and use epoxy. First time it was ever used. Got me a Cof O on a building that had a total condemnation. what we call here in Los Angeles a Gupta special (local slum lord who is trying to make Los Angeles look like downtown Bombay) The 36" to 38" stairway that should be settled on Variance. Your structual engineer might join you in a lawsuit re: acceptance of his plans and calculations.
Wish I was there its an interesting problem. Whats the background on your attorney, is he a member of the precious few? Is he slated for future public office? Judgeship? Remember when dealing with Burrocrats the motto is: "Give to get!"
My best Lucius
I should know more this week after I meet the engineer and talk to my attorney. He appears to be on my side, but not as aggressive as I'd like. I'm not sure about that staircase issue, if I get the engineer involved with that, and he says it can't be changed, that will only help me if I do get the variance. I'll have a hard time convincing the city that I can change it if they still decide I must after my own engineer says I can't. I'm kind of laying low now because I'm goung out of town for a couple of weeks during Christmas, and I don't want anything to happen while I'm gone. If possible, lufos, I will try to do my business quietly and let the attorney handle things. I don't want to make any more waves than I have to. In fact, I was talking to my property manager last week about this, and he told me about another client who created a ruckus with the city, and surprise!, soon all ten of his houses were condemned! Time to put mine in trusts, I guess. I'm telling you though, I don't know why anyone would want this lot. There are plenty of other lots out there and available. Z
Hi everyone! For anyone who's interested in an update, here it is. I'll try to keep it short, hope you are, if nothing else, entertained by it. My meeting with the engineer went very well, and he found nothing unsafe or hazardous with the building at all. In fact, although at a loss to explain why or how, he speculated that the twisty leaniness end of the structure had likely been built into the walls during construction. So, that's good news for me. I was scheduled to close the next two units yesterday, but at the eleventh hour, lo and behold, there were title problems and the sale was postponed indefinately. The other two remaining units, the ones that "went back" to the original lender, now seen to be off the map with no one to sell them to me. Fannie Mae officially bowed out, and with them the realtor involved, as they now had no client. They did, however, do me the courtesy of faxing the title work to my realtor, who faxed it to my attorney. Shortly thereafter, my realtor received a telephone call from my attorey wondering what, exactly the problem was. He couldn't find one, and said it was fine to close with. So he then called the title company we use (not Fannie Mae's) and discussed it with them. They agreed that there was no problem. There is a lein in the title chain, but number one, it didn't belong there, and number two, rather than go through the trouble of removing it, they offered to simply insure over it.
Problem solved, right? Wrong. Realtor phoned listing agent with the solution in hopes to resurrect the deal, but as I said, they no longer had a client. And they had no contact to phone at the original lender. Telephone calls to the original lender were met with people who had no information about the property whatsoever.
Stay tuned for next weeks episode. Z
So do you you get your ersest money back? are you going to hang this deal up and go on? or is there a pot load of money to be made or is the drama keeping you in the game??
Wheeler D.
Not only do I get the earnest money back, but they insisted on it. Well, thats on the two that Fannie Mae deserted. The drama I could do without, and while there is good money to be made if it all eventually pans out, I would have preferred to have done some other deals during the time I've wasted on this one but couldn't because my cash was tied up. I know I could go out and try some no cash deals, but I can only do so much at once, and I really want to finish this property before getting involved in anything else. Maybe for all of this I'll someday have stories that are as good as Lufos'. Z