Real good stories.
The property they didn’t own … or did they?
I have a client named Eduardo who occasionally asks me to help him with finding homes to purchase that he can rent out.
On one particular occasion, he asked me to check on a vacant house located on a road he travels daily. He believed the house to be abandoned as it was overgrown with vegetation and
there never seemed to be any vehicles there.
After driving to the property to see for myself, I
realized he was correct. The property was a mess.
The windows were all broken, the electrical had been
stripped from the walls, the doors smashed, and vines
were growing into the house. The good things were
that the house had a brick veneer, the roof was in
good enough shape to prevent leaks, there seemed
to be no significant settlement cracks, the structure
of the house looked to be solid, and, to boot, it was
situated on more than an acre of land. So, my buyer
asked if I could research the house and owners to
determine details about the property and if they would be interested in selling.
I went to work researching through the GIS website
and through tax records. I located an investment
group in New York that at one time owned a
portfolio of houses in the state. This particular vacant
house was one of them. The group claimed they no
longer owned any houses in that state and that I must
be mistaken. At that point, I suggested they take a
look at the research data I had compiled along with
the recent photos showing the current condition
of the house. I sent them everything I’d compiled.
Through reviewing my work plus their own internal
research, they realized that they did still own this one
remaining house.
We sent them an offer to purchase, which
they eventually accepted. As the house had been
vandalized and abandoned, there was much work
to make it habitable again. Once renovations were
completed, Eduardo added yet another property to his
rental inventory.
“The difference between try and
triumph is a little umph.”
–Marvin Phillips
The expensive lesson …
One of my business partners and I found a property owner who had four lots in a neighborhood that they were in the process
of subdividing into seven lots to sell. The current
zoning for the property would allow the lots to be
subdivided, so they began to move forward by hiring
a surveyor, paying the county fees for approvals, and
spending quite a bit of time and money in the process.
Soon thereafter, the owner listed the seven lots for
sale, and a local builder put them under contract.
During the due diligence period, the buyer’s attorney
found a glitch in the title. Twenty-five years prior,
a deed restriction had been added to the lots in the
neighborhood that stated that the lot setbacks could
not be altered without a certain percentage of the
existing homeowners in the subdivision agreeing to
the change. Without agreement to reduce the setbacks,
the property would not accommodate seven lots.
All of the owners of the neighborhood had to be
tracked down to get documents signed agreeing to
this change, adding yet another cost to the owner of
the now seven vacant lots. As time went by without
successfully locating the property owners and
acquiring the appropriate number of signatures, the
builder terminated the contract. The owner of the
seven lots then had two choices: continue trying to get
those deed restrictions changed or spend more money
reverting the seven lots back to the original four.
What did we learn from this? That it would be
wise to read all deed restrictions prior to attempting
changes to any property you or your clients may own.
This chapter provides an overview of how deeds
work, who prepares them, the different types available,
and some of the issues you might find with deeds.
The “hot mess” property
Linda, a client of mine, had been keeping an eye on a house for sale in a neighborhood she liked. She asked me to check it out for her, so as her real estate professional, I went through the usual
research and pulled up the information on the local
multiple listing service (MLS). As I was reading the
information in the comment section, red flags started
waving on the screen (figuratively speaking). When I
read, “sold strictly as-is using a quit claim deed” and
“please talk to your attorney about this type of deed,”
I knew this property had major issues that would have
to be addressed.
Using the GIS to further research the property
for the aerial view and property layout, I was very
surprised at the findings. This property was a hot
mess. According to the GIS aerial, the property line
for the adjacent property ran directly through the
house Linda was interested in buying. After a long
explanation to Linda of what I believed it might take
to get this legal property line mess resolved, not to
mention the amount of time and money involved,
she asked me what I would do if I were in her shoes.
Honestly, my initial instinct was, “Run … and don’t
look back!” However, I said to Linda, “If you decide to
move forward, I would start with a survey!” And no,
Linda did not move forward with a purchase on this
property, just so you know. She actually moved out of
state to be near her aging mother. But the experience
reminded me that taking the time to research land
conditions before making an offer saves everyone a
lot of hassle.
And by the way, the agent could not get that house
sold; he dropped the listing and told me it truly was
a “hot mess.”
The altered survey … whodunit?
This is a good story about the importance of surveys.
When I was a rookie agent, I listed a vacant
lot for an owner (Jill). I found a buyer who was a
custom homebuilder (Mike). I shared with Mike the
survey Jill had given me. Jill had received the survey
directly from the previous owner (Ken). Please note:
I was not involved in the original purchase between
Jill and Ken.
Both Jill and Mike were acquaintances of mine. I
had worked previously with Mike on lot purchases,
and Jill was my daughter’s babysitter at the time.
During Mike’s due diligence and inspection period,
he discovered that the survey Jill provided had been
altered. When Mike went to the courthouse to research
the lot, he found the original recorded survey showed
a debris burial pit in the middle of the lot. Someone
had deleted the wording “debris burial pit” from the
survey Ken provided to the current owner, Jill.
Jill had no idea she had purchased a lot that
contained a debris burial pit. She had trusted Ken
and decided to save some money by not paying to
have another survey performed on the lot she was
purchasing from Ken at that time. Had she paid for
a current survey prior to closing, she would have
discovered this discrepancy, and my guess is she would
not have purchased the lot from Ken.
Mike had to hire a company to complete soil
borings and soil testing to discover exactly where
the pit was located. It was an expensive task, but
in the end, Mike was able to find enough good soil
on the lot to build a house. Jill literally went to the
site every day to pray over the findings on the soils
as the borings were being drilled. Prayer works,
I’m just saying! However, Jill did have to offer a
discount on the purchase price to offset the cost of
the extensive testing.
Mystery of whodunit? Unsolved!