Unusual situation - Posted by michaela-CA


#1

Posted by michaela-CA on November 24, 2010 at 18:38:11:

Actually, no, I asked him about that and he told me that someone just recorded the plats with the recorder’s office but did not get any approval of the city, nor did they get any kind of permits when they built.

Spoke to another owner of these houses today and he went through the same thing a few months ago. Anybody can record anything for $ 25

I have no idea who they managed everything, but we do have separate tax bills. But tax assessors are separate from the city offices. One hand doesn’t know what the other is doing. I also have no idea how they had been able to get utilities turned on originally, if there was no sign off by inspectors.

I do know, though, that the general building inspector for this neighborhood was more friendly to some people than to others - depending on how friendly they were to him…


#2

Unusual situation - Posted by michaela-CA

Posted by michaela-CA on November 24, 2010 at 08:54:38:

I’m just throwing this out - not as a question - just as another situation that just came up, that I never expected or would have thought of. Just when you think you’ve seen it all ;-).

A couple of months ago I bought this duplex, that’s sitting high up on the corner of 2 streets. And a couple of weeks later I bought another duplex next to that. One of them didn’t have any el. meters and the power company wouldn’t put the meters back on without an electrical inspection. No big deal, right?

First tip of was that zoning told my electrician that they had no such address. So, sent them my closing docs and legal description etc. and figured that’ll be it.

Just got a call from the zoning inspector: They see the whole block as one big lot, that was sometime in the past illegally split up into 8 different lots, had 8 buildings built and was sold off piece by piece.

I don’t know how that could have been done without the city knowing anything about it. They all have separate utilities, the utility companies recognize the addresses, there are separate legal descriptions, the properties can be bought and sold. The city sees it as a multi-family development on one piece of land.

Frankly, I have never ever done a complete zoning research on a property that I bought, as the inspector suggested I should have done. Have any of you?

I’m kind of glad that I followed my gut and bought the one next door as well, so now I have 25% of that ‘development’ - lol.

Michaela


#3

Zoning Letters… - Posted by IB (NJ)

Posted by IB (NJ) on November 24, 2010 at 20:18:29:

I get one from the municipality’s zoning department during my due dilligence period on every property I buy. I learned when working the vacant lot biz during the bubble that the tax assessor puts down whatever he/she wants to in order to collect the most dough. But it’s the Zoning dept. who has the last word as to what property exists where and as what. Chances are that if I would have gone down there requesting a zoning letter stating that this property on block x, lot y is legally a multi family residential property, it would have come up as a problem.

Getting zoninbg letters have saved my but. Once avoided getting into a costly bidding war over an alleged reo 3 family when I discovered that it was really a two. And judging from the price the winning bidder paid, I don’t think he knew. Also, last year I almost brought a legal one family that masqueraded as 2 unit.

So my question to you, since these parcels were illegally created, what do you own? Can you own something that was ilegally created?


#4

Re: Unusual situation - Posted by Jack

Posted by Jack on November 24, 2010 at 18:56:42:

“Sometime in the past”… like 1920 or like 1980? I can believe the former but not the later.

I find it implausible that the utility company would service anything built in the past 40 years without a Certificate of Occupancy.


#5

Re: Unusual situation - Posted by Ken

Posted by Ken on November 24, 2010 at 15:56:08:

Seems to me the city already knows this and has approved it if you have seperate SBL(section,block,lot)numbers and everyone gets seperate tax bills which it seems must be the case or it would have been dealt with long ago


#6

Re: Unusual situation - Posted by michaela-CA

Posted by michaela-CA on November 24, 2010 at 11:51:59:

And as my little wheels were turning this morning on my daily hike, I realized that this can actually be turned into a positive thing in a few years.

Across the street from this block is a 32 acred property that UPS’s non-profit division bought a couple of years ago. They’re planning a mixed-use development there. In the meantime they’ve gotten a couple million from the government to buy homes in ‘my’ neighborhood to renovate and sell - get rid of the REOs and blight in the area. So, they’re cleaning up first (which helps me, of course) and then they’ll build.

So, some years down the road we will be in the unique position to have a larger parcel that’s zoned multi-family, right across from a big development. Each unit in the assemblage would potentially be worth more this way, than if it was a separate property. I own 25%, so I would only need 3 other property owners on my side, from the 6 others, to have majority. And if we decided it was the right time to sell, at the right price, we could force a partition sale, instead of having a person being the lone hold out for higher price or so, as it would be for a normal assemblage.

So, I’m actually happy about this 'bad news now ;-).

I already wrote down the addresses of all the other owners and I will write them letters so that we’re at least all in touch and know about this.

Michaela


#7

Re: Unusual situation - Posted by michaela-CA

Posted by michaela-CA on November 24, 2010 at 09:14:33:

Is that something the title company should have caught? I doubt that they do research on the zoning.

But if this had not been a buyer that’s looking at longer term rental. These properties obviously were bought and sold for years and I bet the other owners don’t know about this, as it doesn’t come up as a problem until you get a permit.

I bought them cheaply enough that they’re well worth it. But what if I had bought them 4 years ago and paid the going overinflated price then? What if I had planned on tearing them down (ok, then I would have checked the zoning map, but let’s say I didn’t) and then find out that I can’t rebuild? Would this be something a title company should have checked?

Michaela


#8

Re: Zoning Letters… - Posted by michaela-CA

Posted by michaela-CA on November 24, 2010 at 20:39:36:

IB,
to be honest, I’ve never heard of a zoning letter and it’s not something that’s been ever brought up by any of the investors in any of the meetings I used to go to in Atlanta.

It’s different in many other parts of the country in regards to illegal conversions etc - They make you tear it down or bring it up to code.

In Fulton County Atlanta they grandfather those in. If they’ve been in existence and use for a certain number of years you can keep using the them way they have been, even if it’s not to code. BUT, if it’s ever vacant for 12 months then the grandfathered condition will stop. So, it’s not such a big issue there normally for buyers, if a previous owner did something illegal, as long as it keeps being used that way. So, I’ve seen some pretty funky additions ;-).

I do own the properties and I do have title insurance. Heck, they were awesome deals, so I don’t regret buying them. Paid 13K for one and 9K for the other.

I need to certify to the inspector that they haven’t been vacant for more than 12 months and he will give me the permit, because then it’s all grandfathered. He was really nice about it and we talked a long time.

It just blows my mind that these guys got away with something like that. In fact, since I love to dig I found out a lot more on these people. They’re still out there. One of them is now traveling the U.S., teaching about becoming wealthy with real estate.
I’m thinking of having my attorney send him a letter advising him that I might file a civil lawsuit for fraud in regards to these properties…

Michaela


#9

Re: Unusual situation - Posted by michaela-CA

Posted by michaela-CA on November 24, 2010 at 19:19:19:

Most of the houses in the neighborhood were built in the early 1900’s. These 8 houses are newer. Some of them say they’re built in 2005. They’re all similar style, so I assume that’s when it happened.

Also, looking at the sales records for the past 5 years (that’s all that show in the tax assessor’s site) all 8 properties were bought by a developer/investor in 2005 for 50K each. They in turn built these houses and it looks as if they had some straw buyers that bought them for 225-290K each. They all went through foreclosure, of course.

That was the height of the mortgage fraud there.

I really don’t know how they were able to get all this established without certificate of occupancy. But the inspector spent the last 2 days researching this before he called me back. And the other owner confirmed that they had the same thing.

It’s really a strange set up anyway: The houses are sitting high up and there’s a retaining wall off the main street and high fences on the other 2 streets, so that you can’t see the houses. Then the last side, there’s a ‘dirt road’ built that runs between the houses, like a cul-de-sac, with 4 houses on each side.