Real estate investor’s Chattanooga house disappears suddenly. The house was lost forever but the land remained. Let me tell the story from the beginning.
An investor came into my office (circa 2004) rather exited and said “the house I bought is gone!” This statement is not the usual way a broker starts his day. I invited him in to discuss the case of the missing dwelling. He started his story from the top…
I went into this house which was in rough shape close to downtown Chattanooga. There was bad damage to parts of the structure,but it was not too much for my construction crew. I planned to repair the place within weeks and rent it out. The electricity was on, I made assumptions that it had been lived in recently.
“A reasonable plan, although thorough inspections are best”, I said. “Continue”
The investor said, “A carpenter I was planning on hiring lived down the road. He called me and said “I thought you were hiring me to work on the house down the street?” …”I am ” he told the carpenter. “Then why is a bulldozer and loader taking the place down?” “%#$%(12***”,,,I don’t know! .. was the owner’s reply.
Confronting the workers, the owner found out the City of Chattanooga had condemned the property. The tear down had been scheduled for months. Even prior to his purchasing the property.
Not only did the City tear down the building, they sent him a bill for the cleanup and disposal.
After digging into the details, we found out several facts. The seller lived in another state. He had a received the notice of condemnation and hatched a plan of deception. He took down any of the condemnation notices, spruced up the property a bit and put it up for sale with a Realtor. His master act of cover up was bribing someone to get electricity to a property that had been condemned.
How did the property transfer with a title search and insurance? Turns out that condemnation, at the time this happened, is not recorded at the courthouse. There are no recorded liens or encumbrances placed on the property for a condemnation action. The seller acted fraudently. The seller had not lived in the property; therefore, was exempt from filling out the long form of the Tennessee Property Disclosure.
The investor could have sued the seller and the agency representing him. He chose not to pursue that action because of the expense and time to win.
Moral of the story? Always dig to find out as much as you can about a property. A “great” visible deal may turn out to be like this real estate investor’s Chattanooga house suddenly disappearing.