Real Estate Investor Training WARNING
Is Real Estate Investor Training Needed To Fight City Hall?
Here are some of the reasons why you need our real estate investor training to succeed. Some municipalities are absolutely resentful of real estate investors and show this by not negotiating “nuance” code liens for non-safety issues.
We have seen liens in the millions of dollars for dog violations when the offending animal hadn’t been in the property for many years. We had one for not cutting the grass and after nine years it was up to $268,000 even when the grass had been cut nine years earlier. Without real estate investor training, would you know where to start with a large lien or code violation on a property?
Banks have taken properties back through the foreclosure process and allowed many to fall into decay causing the municipalities both eye sores and safety issue. Seemingly not fazed by code violations or the impact on local communities, these banks passed the code issues and liens onto unsuspecting buyers. They sold their REOs directly to real estate investors or the worst of these properties through “bulk” sales to middlemen for resale to even more unsuspecting new buyers. Once the purchase is made with the lack of real estate investor training in this area you could be in a serious loss on a property.
The municipalities responded by passing laws that required foreclosed properties to undergo a re-inspection of the property before the deed could be transferred. These re-inspection fees were a financial windfall to the municipalities and once a code officer was inside the property for an inspection, all sorts of new violations were easily uncovered meaning more violations, fines and permits required to fix the property. The importance of real estate investor training by a top real estate mentor program is what you need to get started to become a real estate investor.
If the banks hadn’t been doing it already, they added language into their foreclosure documents that covered the specific liens against the property at the time of the foreclosure – essentially knocking off huge accruing fines in one day. So the new buyers started essentially from zero fines but the violations were still in place and had to be eventually cured.
The municipalities retaliated by passing special statutes that essentially kept the accruing fines in place despite the foreclosure action. The banks sued the municipalities and fought all the way to the Florida Supreme Court who ruled in favor of the banks. So it would seem like the banks foreclosure actions would definitely wipe off existing accruing fines till the day of the foreclosure, but the municipalities weren’t done quite yet.
We just had a Student purchase an REO with almost a million dollars in accrued fines. There was virtually no out-of-pocket “hard” cost to the city or accrued taxes payable. When the Student went to close with his end-buyer, this end-buyer went to the city and asked about the outstanding liens on the property and got a swift response that hundreds of thousands of dollars were owed!
The Student’s closing attorney first reviewed the foreclosure documents. Those documents were prepared and executed correctly and should have cancelled the outstanding fines. He then went to the title insurance company that had issued a title policy to the selling bank and they said the liens were wiped out at closing and there was not a title exception for previous liens. Remember, we are talking about hundreds of thousands of dollars!
The city wouldn’t budge on what was owed and the end-buyers attorney wanted the Student to bring an injunction against the city before she would allow her client to close as the end-buyer.
The policy of the various title insurers seems to be that they will allow no exceptions to the title policy of the fines were properly closed out at foreclosure. However, they also seem to say that they have an expectation that the violations will be cured by the end-buyer. This really doesn’t matter what their expectation is as they have issued a title policy with no exceptions.
So why does all this really matter? The cities have discovered that playing the bully and intimidating unwary real estate investors is easy and profitable – despite their slapping the face of the Florida Supreme Court. Cities hate to be sued because inevitably they lose and at great costs. They know they are in the wrong but push it to the brink by bluffing investors. There is a large risk of loss on a property purchase in city fines and code violations if the buyer has not had real estate investor training to keep them out of this trap.
In this case, the closing attorney tried to talk to the Code Enforcement people with no results despite sending proof and the Supreme Court’s ruling in writing. His next course of action was to talk to the city’s litigation department. These conversations had a distinctly different tone especially after he explained that his client (our Student) would be filing a title policy claim and the city could expect litigation. As real estate mentors in Broward and Dade counties we know what it takes to get deals done for our students.
Municipalities expect you to follow the laws they passed, shouldn’t they have to follow court decisions regarding their own regulations and statutes? The clue in this case was not trying to talk to lower level hourly employees who have no vested interest in the outcome of the issue – these employees still get paid whatever the outcome. If you are thinking that once the end-buyer gets into the property he can expect unlimited scrutiny by code enforcement, that’s the case already with many municipalities. What you can be sure of is unreasonable times for issuing permits, approval of work that requires previously approved changes and even inspectors who disallow a previous inspector’s approval of a specific change. These are the times that try men’s souls so to speak but persistence pays.
In summary, real estate investor training is very important to anyone buying property. If you have this problem you should be made aware of it before your A – B closing and be prepared for your closing agent to get you a title policy that has only exceptions for the work that needs to be completed such a pulling permits to resolve code violations but not including accruing fees. If the property is a deal, remember the Latin phrase Caveat Emptor or “buyer beware” and be prepared to sue the municipality involved. WARNING – if you get a property via a tax deed sale, all of the above DOES NOT apply so be doubly cautious. Tax deed sales do not wipe off code liens!
To your limitless success,
Real Estate Mentor Program Founder