This week I added “Expert Witness” to my resume. It was the first time I have been asked to testify in court regarding a real estate transaction. Actually I was asked back in January, but the court system being what it is, the case was postponed and finally scheduled for this week.
I suppose you might call it a fraud case, mixed with some elder abuse, and some simple flimflamming.
The Plaintiff’s lawyer discussed his case with me and asked my opinion as he explained his strategy. Naturally I did my homework and was ready to testify when the day finally came. Because the case is still in the courts, I won't get into too much detail here, but just to share with you how this event became a “perfect storm” I'll give you the basics of the case.
A large parcel of property was owned by a family trust, which in turn is managed by the family Monarch. He's an elderly man of Hungarian descent—he speaks with a moderate Hungarian accent, and it's clear English is not his first language. He bought the parcel some 40 years ago and has held on to it through good times and bad, until a few years back when he decided finally to sell it, and use the largess for his retirement. The parcel is comprised of 47 acres on a major highway, and it's zoned commercial.
One would think that the world would beat a path to his door for a large parcel such as this, but alas that was never the case. When the market was strong, he was greedy, and overpriced the land. As the market weakened, his price came down, but never enough to catch the good buyers. The second and third tier buyers—ones who needed owner financing—were always around, but there were always issues. Like wetlands.
A minor stream flows through the property, not much of a hindrance generally, but some years back there were the beavers who came on the property and built a dam. Soon there was a pretty big pond, and then the 47 acres was more like 32 acres and 15 acres of wetlands. Over time the beavers were trapped and their dam removed. But even so, each year they came back and started over. Finally a Canadian company was called to solve this problem with a unique drain pipe that moves the water past the beaver dam and empties the pond. The land was dry again, and the beavers were gone.
Fast forward to 2011. By now the property had been for sale for 7 years. The price was still high. But the land was dry and showed well. And the listing with the Realtor had just expired. Oddly at that exact time, the sellers the phone rang--a buyer was calling. A cash buyer. (Who had a long history of fleecing elderly landowners), but who was a sweet talker who could come right over. And when he arrived, he “happened” to have a contract out in the car. In an hour the buyer and seller had executed the contract on the seller's kitchen table, and they drove to a local bank to have it notarized and to then to the county courthouse to transfer the title. In 2 hours a 40 year ownership had changed into the hands of strangers.
The contract was not a standard “Realtor Contract”, rather it transferred the property to the buyer immediately. It created a mortgage on the land with no payments due until all permits were granted—and even then the payments would be interest-only for the next ten years, while allowing the new owners to sell off lots (and erode the collateral held by the seller) and subordinate the mortgage.
So the old fellow was screwed. His English skills really only allowed him to understand he had been offered his asking price, and that was enough. He transferred the land and in return had a mortgage with no income for the foreseeable future and the probability that this mortgage would be subordinated and even then it might simply go away. This was not what he thought he had agreed to, and it took some real gumption to call his lawyer.
His lawyer is an old family friend, but believes they have a strong case. I was happy to be asked to testify and share my experience in writing contracts and advising sellers in what a good deal looks like—and conversely--what a bad deal smells like. But when we appeared at the court, the judge determined that first the case should go to mediation. If mediation didn't solve the case, then it would be heard in October. The wheels of justice turn slowly. Meanwhile the seller is turning 83.
And so that's where we are, waiting to get the case to a mediator. In the meantime, I suggested a possible solution to the attorney which he proposed to the opposing council. The goal is to get the deed back into the hands of the trust--moving the ownership back to the family that has owned it all these years, (and “lost it” in a moment of haste). More to come on this topic as the case unwinds.
Dane Hahn is a real estate professional (and now a professional witness) practicing in Florida and New Hampshire. You can reach him at 941-681-0312, or at email@example.com. See him on the web at www.danesellsflorida.com.