Land deal gone bad

Started by archimedes, January 21, 2011, 09:51:46 AM

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archimedes

Well I finally found a nice piece of land to build my cabin on.  It's 10 acres in the Catskills of NY fronting on a small year round stream.  It has some woods and a meadow and is relatively flat. 

It had been on the market for over two years partly because it was overpriced and partly because the market is pretty bad.  So I put in a low offer.  The seller countered,  which I rejected,  and he finally accepted the initial offer.

Since one of the conditions of the sale were for a quick close,  the realtor instructed me to hire a local attorney immediately and start the closing process (all cash deal).   Several days went by and I was wondering why I hadn't received the signed contract back from the seller/realtor.   She said her fax machine was broken but that she would get it to me the next day.  I was a little suspicious but decide not to worry.

Next day,  I should have worried.  Another offer came in after mine was accepted and the seller decided to take it.  And basically challenged me to sue him.  Since I'm in FL and he and the property are in NY he know that wasn't likely.  Plus without anything in writing I really didn't have a leg to stand on. 

Bottom line;  I trusted to seller and realtor to act ethically and neither did.  They even went so far as to mislead me to stall for more time while then fimed up the second offer.  Lesson learned,  get it in writing and trust no one.

I really liked that piece of land.
Give me a place to stand and a lever long enough,  and I will move the world.

Redoverfarm

Sorry to hear of your deal gone sour.  If the truth be known there are probably hundreds done the exact same way everyday.  I am a firm believer in documentation which is only one of the essential ammunitions that one needs these days.  Not that it would have prevented your loss but might have given you a stronger leg to stand on. I think we still perceive the notation that everyone is honest and sometimes forget that honesty is a dwendling breed in todays modern society.


rick91351

I really think there is more to this than they are telling you.  Or the owner backed out and still has the property.

Who paid for your attorney, and why was there no earnest money collected?  This all sounds way, way too strange to me.  Anytime I have ever made an offer or accepted an offer there had to be earnest monies up front before they would approach the seller.  Did they use you for a shill in this deal with someone else they were dealing with?  Maybe the local attorney?  Or someone who was sitting on the fence they knew and they used you to get him off.  Did you happen to talk to the state board of realtors or what ever their governing body might be?  The question to me did the realtor work within the law and within ethical guide lines of their association or governing body.  Seems to me they did not however they most likely will say it is all above-board.  

WOW!  That is a first!  Unethical practices in real estate.  Gee!!  Who would have thought!  If you are dealing with that type of people, they more than likely did you a favor before they fleeced you the rest of the way.  
Proverbs 24:3-5 Through wisdom is an house builded; an by understanding it is established.  4 And by knowledge shall the chambers be filled with all precious and pleasant riches.  5 A wise man is strong; yea, a man of knowledge increaseth strength.

Pox Eclipse

Was it a realtor or just a real estate agent?  If it was a Realtor®, the National Association of Realtors® might be interested if one of their members is acting unethically.

archimedes

#4
I'm sure there was plenty going on behind the scenes that I'll never know about.  I hate to be the suspicious type but the whole thing reallly didn't make any sense.

The other offer came from a different realtor (I was dealing with the listing agent).  When the property seemed to be slipping away from me a told the listing agent that I would match the other offer (I figured it was better to get the property at the higher price than stand on principle and not get it).    That way the seller would get the best price,  the listing agent would get the full commission, and I would get the property.

Even that didn't work.  After several days of not returning my phone calls I get a text message from her saying "the property is gone, sorry".

Very fishy.

According to NY law without the final signed contract in my hand I didn't have a leg to stand on.  Plus,  like I said,  I'm 1200 miles away, too far away to pursue any action even I I wanted to.  The attorney I was dealing with didn't charge me anything though.  He said he knew that I was going to buy something eventually and just asked that I use him when I did.

So the attorney is the only one who operated with any integrity.  How ironic.

So the property search starts all over.
Give me a place to stand and a lever long enough,  and I will move the world.


bayview

   Sorry it didn't work out for you . . .   

   I guarantee this goes on all the time.   Generally for the benefit of the realtor/real estate agent, not the buyer or seller.      I could write a book about the !#%&(*&% I have heard from the lips of realtors. . .    Buyer beware!   It's all about the commission.

   We had bid $10,000 on a piece of property overlooking the lake.   The real estate agent said she had contacted the seller and he wouldn't take less than $12k.   Well, we didn't buy . . .    In hind sight, we should have come up with the other two.

   A couple of weeks later the property sold for $9000.

   Obviously the agent never contacted the seller with our offer.   Probably was able to get a good deal for a friend.   Unfortunately we had no documentation.   (The offer) 

   That was 6 years ago . . .    Property is now listed for $40,000.   I wonder how they will split the profit?

/. 
    . . . said the focus was safety, not filling town coffers with permit money . . .

MelFol

Sad, but the times when a man's word was his bond have all but disappeared. 

Squirl

#7
It is not just the state of NY, I believe it is every state.  All real estate transactions are required to be in writing to be enforceable.  It is covered under the statute of frauds originally from England.  You can Google statute of frauds if you want to learn more.

My brother had this happen to him recently.  A house sat on the market for 450 days, no one had bid on it.  He threw in a low ball bid, and it was accepted, but they had 10 days to accept a higher bid if it came in.  The realtor called him on the 10th day and said a higher bid came in and gave him the ability to rebid.  He smartly walked away. This is a frequent occurrence with realtors, if they or the seller think they can get more, they will try and break any agreement. Realtors are just like used car salesman.  Caveat emptor.  When I was sure I was going to buy a property, I paid my lawyer up front and had him contact the seller and realtor.  He was a real estate attorney and he was paid a flat fee, regardless of sale.  He worked for me, he knew the ins and outs of the industry better than any realtor.  No one even tried to pull a fast one.

If it is in NY, almost all county tax departments are online, you can easily check to see what the selling price was.  If, like in bayview's case, it shows for less, you can contact the seller directly.  Their address should be listed with the county.  Realtors are not like lawyers, you can legally go around them.  Also, if they falsified the paperwork to show it sell for less than it really did for tax purposes, the local DA, police, and government tax collectors might be interested.

Bayview, the situation you described seems more like a matter for a prosecutor.  While there may be no documentation for an enforceable contract, two testifying witnesses with corroborating phone records seems like enough for a fraud prosecution.

rick91351

Squirl I am with you 100% on the attorney.  After some things that happened within our family during the real estate bust I am 100% in line on that.  I know from now on I will spend the money on an attorney.  I will show up to sign but only after his firm says it is what was agreed to.     
Proverbs 24:3-5 Through wisdom is an house builded; an by understanding it is established.  4 And by knowledge shall the chambers be filled with all precious and pleasant riches.  5 A wise man is strong; yea, a man of knowledge increaseth strength.


AdironDoc

That happens down on Long Island again and again. Seller and his broker take your offer verbally while prodding a fence sitter to make a move on their higher offer. Illegal? Probably not. Slimy? You bet!

Don't give up on your search... have you found anything else?

Doc

archimedes

Quote from: AdironDoc on April 20, 2011, 10:00:27 PM
That happens down on Long Island again and again. Seller and his broker take your offer verbally while prodding a fence sitter to make a move on their higher offer. Illegal? Probably not. Slimy? You bet!

Doc

I think you decribed what happened perfectly. 

I did a little add'l research and discovered that the other "buyer" turned out to be another realtor in the same real estate office (the public records have been updated with the new owners name and it was pretty easy to do a google search and find out who it was).

I was led to believe that the buyer was another customer that she had no idea about.  Well that was totally untrue since she works with the new owner,  in the same office.  I think slimy is the right word.

I even contacted the new owner,  with the intention of offering to buy all or part of the land from him,  and he refused to return multiple phone calls.  ???

When was the last time a realtor didn't return a phone call from someone that wanted to buy something from them?   Never,  unless they know they did something wrong.  I wasn't even going to complain to him about the deal.  He won,  I lost,  name your price.  If it's reasonable I'll pay it.  If not,  I'll walk away.

Well, the story has somewhat of a happy ending.  Yesterday I signed a binder on the lot immediately to the north.  I paid more thandouble, per acre, compared to the other lot.  But my lot is much nicer.  It's set way back from the road,  has about 500' frontage on a pretty little year round stream (the other lot only had a glimse of the stream),  has a small,  pretty,  spring fed pond,  and on site electric.  All in all a better lot, but not the bargain of the other deal.

If everything checks out I'll be closing in May,  and starting my Catskills Mountains build thread.

Any suggestions on what I should look for,  ask,  check out would be appreciated.  This is my first raw land purchase.
Give me a place to stand and a lever long enough,  and I will move the world.

Squirl

In this area of NY, look for mineral rights.  I will state straight out that I am not a fan of fracking.  I am especially not a fan of people getting screwed.  A title search should turn up all easements and leases.  Title insurance should keep you protected if they miss anything.  It sounds like this was a subdivision at one point.  There should be a survey map on file with the county.  Check to see how much it costs to get a surveyor to recertify the boundaries.  It should be very easy and cheap for the original people to do it.  They tried to overcharge me when I did, so I told them to pound sand.  Make sure you have a right of way, if not a road.  You can check to see if you have in writing the ability but not the obligation to improve or maintain the right of way.  A road is best.  If you can, I would try to make the contract contingent upon a perc test.  All these things could run $1-2K.  It is a hard pill to swallow in upfront costs on a property you may not buy.  It is worse to spend 10-20k on a property that's not buildable.

archimedes

Thanks,  I never thought about mineral rights.  I have seen a lot on "No Frack" signs on peoples lawns around the area.  Doesn't seem very popular around that area,  but that would be a concern.

I do have a recent survey of the property.  The access to the property is through a long driveway  to the property.  My understanding,  and the tax map shows,  that the driveway is owned - not a ROW.   It doesn't show that way on the survey though,  so I'll have to clarify that.

Still having trouble with the price though.  It's a hard pill to swallow paying so much more,  per acre,  than what I was going to get right next door.
Give me a place to stand and a lever long enough,  and I will move the world.

Squirl

The access point in a real sticker.  I would probably walk away, just a personal preference.  The cost of litigation enforcing your rights of access years later could be astronomical.  I have read a lot of litigation cases on this topic.  I would get a lawyer to explain the property laws.  Every jurisdiction is different.  My general recollection is that a right of way is created through a property when a property is sub-divided.  Where, how big, what access is allowed, and maintenance are all either spelled out by law or by a costly legal battle in court.  I read a case where a person frequently accessed his property through the drive way of a neighbor.  But his property was not subdivided from the neighbor's property. It was subdivided by the property behind that, which had road access on the other end.  The difference was that the neighbor's property was only a 200 ft drive to his property.  The law doesn't always work that way.  Why should the neighbor have to give up his rights of ownership over his land if he never had anything to do with the creation of the first party's lot?  So the court found that the guy had a right of way through the half mile long property behind him, and not through the driveway he was used to cutting through.  He would have to sue for the right to chop down and put in a drive through half a mile of timber.  Another mistake is that people assume a right of way always includes a road, vehicle access, or utility access.  All these have to be spelled out in the deeds of your neighbors, not just your own, or with an order from the court ($$$).  Your lawyer should help you navigate all of these.


archimedes

#14
I am a little concerned about the access.  But my understanding is that it is not a R.O.W.  but owned land.  I think they call it a "flag lot"  - where the narrow strip of land that is used as a driveway is actually owned land attached to the property.  I think that is different from a R.O.W.   ???

The county tax records show the flag lot formation with the driveway as part of the property.  But the surveyor did not include the driveway in the surveyed land.  I don't know why.

Added:  For further irony,  the driveway, or ROW,  whichever it is,  runs entirely through the lot that I lost out on in the beginning of this thread. :-[
So if there were ever a dispute about the ownership of the driveway strip it would be with the new owner of the previously discussed parcel.
Give me a place to stand and a lever long enough,  and I will move the world.

MountainDon

You need a real estate attorney, not just a lawyer that does a little biut of everything or the word of a broker or agent or even what anyone in the county records office tells you. You pay him/her to make sure everything is stated clearly and you make sure you understand what he/she tells you, You pay him/her because then they have a responsibility to make certain all the t's are crossed, the i's dotted, etc.

We found real estate attorneys via word of mouth recommendations from business associates and personal friends. I've only used two different ones over the years but thay both asked questions I would have never thought of on my own, at least not before the purchase.
Just because something has been done and has not failed, doesn't mean it is good design.

rick91351

You need a real estate attorney as Don says.  The grief my daughter has gone through and including bankruptcy, and of course the loss of her home.  The home she worked very hard to get and to keep.  Then only loose because what was agreed was not what she signed and ended up with.  Top it off we then had to bail out those who did it to her.  Remember too big to fail.  Never again.

I do not understand why in your case the property line is cloudy.  This is a real heart burn with me and a no go!  I would not have anything as you are describing that I could not gate or close off.  I understand an easement, I can block that off.  Then if the gas company, power company or what were needs to use it for maintenance then they have access.  But I am not buying anything that the neighbors, the neighbors kids and friends are racing motorcycles or four wheelers past my house at four in the afternoon let alone four in the morning.  What if the neighbor on the other side decided to build a 'shop' that he starts moon lighting stuff in and out of there at all hours?  He starts parking stuff there for days on end and you go to talk to him and he tells you to pound sand, after all it is as much his as yours.     
Proverbs 24:3-5 Through wisdom is an house builded; an by understanding it is established.  4 And by knowledge shall the chambers be filled with all precious and pleasant riches.  5 A wise man is strong; yea, a man of knowledge increaseth strength.

archimedes

#17
I appreciate all the advice guys.

I interviewed a couple of law firms on Friday to see who I would hire.  Spoke with one office (I guess I was speaking with a legal asst/paralegal,  may have been an attorney) and he seemed satisfied with the driveway showing up on the tax map as part of the property.

Since it was Good Friday,  most everyone was closing up early and I couldn't really go into detail with him.  But I definately will follow up and resolve this completely.

My previous posts were somewhat unclear,  so let me clarify.

The property that I am buying is a 5 acre rectangle.  The 10 acre parcel directly to my south (the one I lost out on) is also a rectangle.    The road is along the southern border of the 10 acre parcel.

To get from the road to my property,  there is a ~12-15 ft strip of land on the eastern border of the 10 acre parcel running from the road north all the way back to my property.  No one else uses,  or would need to use,  the driveway since both neighbors have direct road frontage.

I had previously said the driveway runs "through" the 10 acre parcel when in fact it runs adjacent to it's eastern border.

I hope that was clear.

I am kind of concerned about it anyway though.  
Give me a place to stand and a lever long enough,  and I will move the world.

Squirl

I believe I understand it.  I got a picture when you said a flag lot.  The driveway is actually part of the same parcel you are buying and has road front access is my understanding of your description.  The only other concerns I would have is utility access and the survey with markings and agreements with the neighbors for the boarders for the part of the parcel that touches the road.  I don't know if you are running power.  Check for the easements and requirements ahead of time.  If you have 15 ft of land according to the meets and bounds description and the power company requires a clearing of 10 ft on each side of the line you will have to cut down your neighbors trees, which could be a problem.  Just giving a heads up on some of the things I had to research.

archimedes

The utilities are already at the site.  There used to be a house there at one time. 

The only remaining issue,  and I'm waiting for a call back from my attorney,  is that the tax map and the survey disagree.  The tax map shows the driveway as part of the property,  the survey shows it as an easement or R.O.W.  So that conflict has to be resolved.

Give me a place to stand and a lever long enough,  and I will move the world.


Squirl

It is possible to be both.  They are not exclusive concepts. The driveway can part of the same parcel with an easement through it depending on the wording of the deed.

rick91351

Quote from: archimedes on April 25, 2011, 11:15:53 AM

The tax map shows the driveway as part of the property,  the survey shows it as an easement or R.O.W.  So that conflict has to be resolved.


Not unusual I think.  On our place in the hills there is a 7.5 acre parceled out of a 158 acre field.  This was a gift deed at one time, so my folks cold vote on a school bond election.  When we went to get permits for the shop construction.  We had to have that east property line resurveyed.  This was because the SAT map and the property lines did not match up at all.

The computer automatically drew in this as being a more common 10 acres not 7.5 acres.  Further the 7.5 acres most likely was never surveyed properly.  This was done in the 1930 depression times.  There just was no money for that stuff.  Then there was another muddy the water thing as well.  A huge hay shed popped up on our property, the assessor want to know all about that.  (It sort of strayed of the property line from the neighbor by ten feet.)  Their satellite map showed it the whole thing plus.  So all in all it needed to be surveyed and I did not really feel it was a waste of time and resources.  And it was not like we were way down on the list when we contacted them with the building and development slump.       

These satellite photos are something all you people that want build under the radar and not permit might want to think of.  As this become more and more common will the software compare year to year and flag new roads, and new buildings?   [noidea'

Further the surveyor we had to hire was very critical of the satellite surveys.  He says this stuff happens all the time.           

Quote from: Squirl on April 25, 2011, 11:32:48 AM
It is possible to be both.  They are not exclusive concepts. The driveway can part of the same parcel with an easement through it depending on the wording of the deed.

Squirl this would not be uncommon would it, when developing a parcel of property? 
Proverbs 24:3-5 Through wisdom is an house builded; an by understanding it is established.  4 And by knowledge shall the chambers be filled with all precious and pleasant riches.  5 A wise man is strong; yea, a man of knowledge increaseth strength.

rwanders

An owner of real estate still owns, and is taxed on the areas noted as a ROW or Easement----they are grants of limited rights of another party to, for instance, enter your property to build and maintain a power line or other utility service, A ROW is a limited right to travel across your property-----they do not, usually obligate you to build or maintain a road for their use. As far as the tax map or tax assessments, they are not counted as deductions in the value of your land----it is rare to find subdivided property without one or both being granted---all public roads require ROWs and they will be granted by the subdividers as they get approval of the plats----the same plat will often include easements for public utility uses. I know some who get their noses all out of joint over these items on their plat but, they are one of life's little burdens which are almost impossible to avoid. Many others had to grant ROWs so you could travel across "their" land to get to yours and the same had to grant easements so your property can be hooked to utilities and to let your neighbors get theirs and have access to their property.  Easements for instance----you can use the property but if you want to build a shed on the easement, you may have to move it when the power company needs to maintain buried cables---yes, you do lose some of your usual rights but easements and ROWs are usually found immediately next to the property lines and setback regs usually prevent any construction other than fences anyway.  Or you can move to remote parcels in Alaska and will probably never be put upon by neighbors you won't have. However, even there you will travel over many miles of ROWs granted by whoever owns the lands between the Anchorage airport and your property.
Rwanders lived in Southcentral Alaska since 1967
Now lives in St Augustine, Florida

Squirl

I agree with most of what rwanders said except if the language of the right of way or easement is for public use.  The subdivision I have property on wrote the right of way language as for public access to anyone in the public and it is across the front 30 ft of everyone's property, essentially establishing a road that the town does not have to maintain.  Because of this it does show up on the tax maps and none of the property owners are taxed for it even though it doesn't show up on the surveys.  So the owners may have a 10 acre lot by the survey but are taxed as a 9.5 acre lot because they have no control over who uses the right of way.

Private right of ways are usually only for the benefit of a land owner, his invitees, or his designees, not everyone in the public.  These are usually still taxed and listed as private property.

Thank you rwanders that was a much more detailed explanation of what I meant when I wrote "it depends on the wording of the deed."  As to what rwanders said about the "obligate you to build or maintain a road".  It is helpful for it to be clearly written who has the right, or the obligation to do this.  If someone wants to build a road where there is a right of way, it is nice to know whether someone has the right to build that across your property or you have the right to build across someone else's land.

rwanders

While some may think the city, county or state values property by size of your parcel, that is only one factor----value is determined much more by comparable sales of similar property. The value of land without legal access for roads or utilities (usually via ROWs or easements) is severely limited. In other words, those pesky ROWs and easements actually make your property and your neighbor's more valuable. One may make a principled point of sorts that they are being taxed for land they don't have complete control over but, arguments with tax assessors based on that principle doesn't really take you anywhere unless you really get off on tilting at windmills. 

I have property served by private roads----may not get taxed for their construction and maintenance but, they are not free---construction costs were completely included in the purchase price and maintenance is paid through the owners association dues and assessments as necessary. In most cases those costs are not apportioned according to value of your piece of land----almost all are on a per lot basis---doesn't matter if you own two acres or one----all are charged the same price. if you own two lots side by side-----you pay the same costs for each lot----no, replatting will not cut your bill in half.   
Rwanders lived in Southcentral Alaska since 1967
Now lives in St Augustine, Florida