Tuesday, July 14, 2015

The Dirty And Potentially Illegal Tricks Roanoke City Government Plays On Unsuspecting People At Tax Sales


Dirty Tricks People Play For The All Mighty Dollar

The tax sale is Tomorrow Wednesday July 15th at 12PM at the Roanoke City Civic Center. This message is a reminder to those of you novices that don’t know what you’re doing. The city WILL take you for a ride and you need to know and understand that before you bid. Be very careful making a deal with the city because they feel like they are above the law.

Roanoke City has a tax sale of real estate every 8 months to a year. I’ve attended every single one for the past 10 years or so and have purchased a few properties from these sales. I’ve learned allot of lessons over the years and the city has taught me that they can not be trusted and are willing to stoop to low levels that are shocking and most likely illegal.

It is important to expose this corruption within so those who are leading this city have an opportunity to resolve the issues and terminate the city employees who are taking part in this. I am expecting some changes to be made this year regarding disclosure as some people high up in the government ranks were shocked last year when I exposed the scams that were taking place amongst low level government employees. But I can tell you for a fact that they did not terminate any of the employees that were responsible and I could name each one of them.

Below are a few issues that I have personally witnessed or have been a part of. I’m sure there are many more.

Sales Advertised With Guaranteed Clean Titles Are Not Guaranteed Clean:
Roanoke City advertises in their tax sales that they are giving you a property that has a clean title and is free of all claims. I purchased a property back in 2007 that had a serious title problem. Years before the property was sold with the wrong lot information, it was mixed up with the lot next door. Which means the person next door actually is the owner of the property. No title company would insure it therefore no bank loan could be obtained as a result of the title problem and ability for the next door owner to lay claim to the property. I contacted the attorney working for the city at that time and he told me that’s your problem and sent me packing after paying 35K for the property. So lots of money and work for my attorney and we were fortunately able to get a clean title.

Property In SE Roanoke Torn Down Just A Couple Days Before The Sale And The Contracted City Attorney At That Time Contemplated Not Telling Buyers:
Roughly 5 to 7 years ago I was driving around last minute, a couple days before the sale, and saw one of the houses that was advertised for sale being demolished. When I got to the sale there was a photo of the house not demolished. I overheard the same attorney as before with my title problem talking to the guy in front of me. He was telling him that it was demolished but they seriously considered not telling the buyers as they don’t legally have to do so. I was shocked. It’s Unbelievable that anyone would even think about doing that. I’m sure that most people already did their research by driving around and viewing the properties long before I did and when they were looking at it it was there.

City Rezones Property And Hides That The New Owner Will Have To Convert It To Another Use:
Every once and a while the city rezones properties across the city. I think the last time they did it was in 2006. The law is that if a residential property is vacant for at least 2 years than it loses it’s CO and has to revert to a single family house. Almost every house at every tax sale has been sitting vacant for at least 2 years. It takes 2 years of non payment of taxes in order to be able to sell the property to get their tax money.

When a multifamily house is sold at these tax sales and you look online on their GIS you will see that they will leave the property listed as a multifamily even if they are going to force the property to be reverted to a single family due to sitting vacant for too long. Most people do not know these laws. Fortunately I have been doing this stuff for long enough to know what the city will pull on people as they have attempted to do the same thing to me or fellow investors I know.

If the property was rezoned as single family and sat there for 2 years the city will not let you keep it a Multi family. They will force you to get a permit and revert it to a single family house which could bankrupt someone who was not expecting those additional costs and just getting started out in investing. I have seen it time and time again.

There are MANY examples of the city hiding this information at the sale. As a matter of fact, Not a single time have I ever heard the city disclosing this information. Unsuspecting buyers pay big bucks for these properties thinking that they are able to continue operating it as a quad or triplex or duplex and then later find out that they have to dump many more piles of cash into it to bring it to the cities new requirements. Often they don’t have the money to do so and the deceptive practices that the city takes part in end up ruining the rest of their life due to that bad investment.

Take the property at 608 8th St SE that was sold at a tax sale many years ago. And the house is still sitting just as it was. The only difference is now the neighborhood gets to continue to look at that eyesore because the government hoodwinked the buyer who significantly overpaid for the house because he thought he was buying a Quadraplex. I bid on that house but couldn’t justify more than 5K due to the knowledge of the games that the city plays with peoples lives. This poor guy got in a bidding war with other novice investors and ended up sinking 20K into the property before any work was done.

Or look at a couple tax sales ago and the property at 1509 Chapman Avenue. Which appears to be a duplex to the novice however it was rezoned a single family house and will be required to be converted by the novice investor. Wow, wait until they find that out. And guess what. That property is back up for sale again. I wonder if the city gave the poor person their money back.

I’m willing to bet that I would hear some city employees defending their non disclosure of this information while stating that they legally don’t have to. I would find it hard to believe that they legally would not be required to disclose something of such significance. However if they aren’t required to do so they still have moral and ethical behavior that we should be able to count on.

If you are reading this and you agree with what they are doing and are saying in your mind that an inexperienced investor should not be warned  about this as they should have done their due diligence, than you have something very seriously wrong with you. Yes, I am calling you out specifically. You need to get help. You are an evil heartless person and need to go back in your hole. That’s right… I said it!!! The world would be better without people like you.

Now don’t get the impression that there was some big slip-up and the city “forgot” to tell the auctioneer. This happens at EVERY tax sale. And at EVERY tax sale the city pays it’s code enforcement department with tax payer money to be at the sale over in the corner taking notes on who the next owner will be as their attack will follow the new unsuspecting owners purchase. 

City Has Detailed Knowledge Of Serious Problems With A Property And Hide This Knowledge From Buyers:
Another property went up for sale at the past tax sale that had a huge fire in it a few years back. The city condemned the property after the fire and boarded it up. This property was 819 Campbell. The only reason I know that it burned is I own a property behind it. You can’t easily tell from the outside that this property was destroyed. I am being told that this year they will disclose information regarding fire damaged properties. I wonder if they will disclose which properties that are multifamily that they are going to force to be turned into a single family. Or any of the other dirty things they have up their sleeve.

I bid on this fire damaged property because I specialize in extensive rehabs. However I was only willing to bid at most $3,000 as it would take a substantial amount of money to rehabilitate it. Most people couldn’t do it.

Even though there were a number of the code enforcement staff and management in the building, they all decided to deceptively hide the fact that they condemned this building due to a bad electrical fire in the basement. I have been told by an unnamed city employee that they have, in their possession, a file on this property that includes all of the pictures of the damage etc but were unwilling to disclose it. It’s the law that things like this are disclosed by Realtors and knowledge of something like this and not disclosing it is FRAUD.

I have been told through the grapevine that in most cases they will not allow someone to back out of money owed to the treasury department but will make exceptions when friends of the city are involved. In this case the unsuspecting bidder of this property backed out which leaves the city offering the property to the backup bidder which was me.

So I contacted the auctioneer to purchase the property. But in doing so found that the new attorney used by the city who is responsible for the tax sales has a “friend” that he was trying to give the property to and they are not interested anymore in selling it to the backup bidder which is standard procedure. NICE, again this kind of corruption these days should be expected from our local government. The end result is the property didn’t sell as this message went out last year and we ended up exposing what was happening. There was a day and time where you could count on and trust in what government does but I’m very sorry to say that that is a time that has come and gone…

You may be saying… Dallas, if you have the knowledge of this, why don’t you stand up at the tax sale and warn people. Well, my answer is that I did. Both me and Dan tried to tell the auctioneer, city employees and other buyers at the sale that the city was advertising an incorrect higher Tax Assessed value of every property but we were quickly shut down as the auctioneer referenced his communication with the city attorney regarding people speaking up at the sale. He then restated that they are correct tax assessed values. The reality is that they were last years higher tax assessed values and no representation of todays assessed value.

So what do we do about it? Actually I don’t know the answer to that. That’s why I’m writing about it. It can serve as education to novice and moderate investors.

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