OfflineThis is a tale that should give all investors pause. Though it’s extreme, and it’s unlikely that many will run into a situation this bizarre, we should all note that it does happen.
A real estate investor purchased a four-plex in St. Paul in 2008, and she’s still in court trying to get back some of her money. She knew it needed work, but not the extent, and there is no indication that she had it inspected. She paid $47,621 for the property, purchased from an investment trust represented by the Bank of New York.
It seems that in April of 2008 the City of St. Paul mailed out notices to all concerned and mentioned in the public records that the property had been declared a nuisance and uninhabitable. At that time, the investor had not closed on the purchase, which happened on May 1, 2009. That date happened to be the date that the city was preparing another mailing sent on the 9th that gave notice of two upcoming hearings to determine the fate of the building. The city was still using the original list of recipients, and the new owner never knew of the hearings.
While a warning was posted on the property, neither the buyer or her real estate agent saw it. There were no attendees at the hearings from either the seller or buyer side. The city went ahead with the condemnation and tore down the house after the investor had around $5000 in repairs in it. And, they’re billing her for $27,000 for the costs of the demolition and removal.
Of course, there are lawsuits. The buyer is suing the investment trust, who her attorney states knew about the situation and failed to disclose. The buyer is Cambodian, and speaks broken English. However, an inspection would have been prudent. It’s possible she will prevail in the suit however.
Trust but verify.
I hope this poor investor gets her money back. What a shock it must have been.
A good warning to us all.
RENinja
"Remember, success is a journey, not a destination.
Have faith in your ability."
Bruce Lee
to do your due diligence, but ya gotta wonder if someone ones keeping it under wraps. What a nightmare! Hope she can get her money back too.
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wow, this is something that sounds like a movie or some fictional story, but man oh man i feel terrible for this lady, now a days is not the time to be loosing out on money
Wow that is rough. It makes you wonder if she did all the due diligance on that property. I hope it works out in her favor.
" Not Having a goal is more feared than not reaching one"
Christa Niven
she'll most likely get little to nothing after legal fees
This is another good reason to check with the city on each property you want to buy. It sounds like they didnt do that. Either her or her realestate agent.
" Not Having a goal is more feared than not reaching one"
Christa Niven
that hurts!
I actually saw a property out of state for sale at an auction; by the photos the property did look ok. After my partner went to look at the property though, it was a different story: she could not even go inside - apparently there had been a fire in the house and everything inside is burned, windows broken, etc. The house looks nothing like the posted pictures!
We have to do our due diligence, there is not other way!
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
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I lived in New York for three years and spent almost a year in court over the destruction of my personal property (a cell phone). I can only imagine how this is going to go. All I can say is, "Good Luck in New York!"
Can't stress that enough! Its a shame she has to go through this the hard way.
I actually went in contract on a place a couple of months after joining the SA at Auction.com, and during my due diligence, I had an inspector go out and look at it after winning the bid, and instead of the BS the agent and the auction company had about the property, it was found it would be better to knock it down completely. Then, I called the county to go check it out because they had no knowledge of the property, but I had someone from the county's inspector office go look at the property (it was in WI) and they said that its condition is such that they would need to condemn it and will start procedings to do so. Since my contract was an auction.com,and there were only a few ways out, this of course easily got me out of the contract. I got out of the auction with all EMD back due to the county condemning a property they should have been condemned earlier. There's a reason there was over $200K in equity.
So, I was spared what this lady is going through because I took action; from the way its written, it makes it seem as if she was going off of someone else's recommendation to buy the property. Hope to track how this case turns out.
What a shame! If she had only been on DG we could have given her better guidance!
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