Funny, I didn’t see the double homicide in the seller’s disclosure!

by: Peter J. Gallagher

Do sellers of real estate have a duty to warn potential buyers about murders or suicides that occurred at the property they are trying to sell? The answer in most states, somewhat surprisingly, is no. As MSNBC reported in a recent article, “3 BR, hot tub, 3 murders: How homicide homes hold their secrets,” only two states – Alaska and South Dakota – require that sellers’ agents reveal whether a homicide or suicide occurred in the property within the previous 12 months. According to the article, five other states – Connecticut, Delaware, New Hampshire, North Dakota, and Oklahoma – require that agents “truthfully answer the question” if a prospective buyer asks about “past bloodshed.” The article further reports on a study, which showed that so-called stigmatized homes languish for longer on the market and ultimately sell for less if their macabre history is revealed, either by sellers or through the grapevine.

Finally, lest you think potential buyers are just being overly paranoid, consider the tragic ending to the story of the man profiled in the MSNBC piece:

Days after closing on his dream home – a brick colonial near the Washington, D.C., school he was toiling to save – principal Brian Betts learned of his property’s ghastly past.

Inside the house, 11 months earlier, an intruder had shot and killed a 9-year-old girl and her father. Horrified, Betts demanded the transaction be rescinded. When that effort failed, he invited two ministers to pray over his new place. Then Betts tried to paint over the grim history, refinishing the woodwork and refurbishing the kitchen.

Seven years later, in April 2010, a robber shot and killed Betts in his bedroom.

You Got A Better Idea?!? Government Opens Suggestion Box For Ideas On How To Rent Out Foreclosed Properties

by: Peter J. Gallagher

The New York Times is reporting that the government is soliciting ideas for turning its glut of vacant, foreclosed houses into rental units that could be managed by private parties or sold in bulk ("U.S. Seeks Ideas On Renting Out Foreclosed Property"). The goal of the program would be to "stabilize neighborhoods where large supplies of empty, foreclosed properties have hurt property values" and "clear the nation’s balance sheet of real estate holdings that, because they have been difficult to sell individually, have hung over the housing market and stunted sales of existing homes and new construction." The request for ideas comes from the Federal Housing Finance Agency, the Department of Housing and Urban Development, and the Treasury Department, and you can click here to submit your ideas.

As the article notes, the percentage of homes owned by the government that are currently in foreclosure is somewhat staggering:

Of the 248,000 homes owned by Fannie Mae, Freddie Mac and the F.H.A. at the end of June, 70,000 were listed for sale, said Corinne Russell, a housing finance agency spokeswoman. The remainder were not yet on the market or the agencies had already received an offer from a prospective buyer.

But it is possible that hundreds of thousands of more homes that are now in the foreclosure process could come into the possession of the federal government in the next few years, housing experts say.

The government is now looking for a few good men ideas for how to deal with this crisis. Among those already proposed are "rent-to-own programs, in which previous homeowners or current renters could lease properties as a path to ownership, and ways in which the properties can be used to support affordable housing."

If you have any thoughts, be sure to let us know when you let the government know.

“Put Your Makeup On, Fix Your Hair Up Pretty, And Meet Me Tonight In Atlantic City.”

by: Peter J. Gallagher

Apparently there is more than fist bumping (pumping?) going on "down the Shore." The PropertyProf Blog has an interesting story about what it calls "A Non-Taking On The Jersey Shore." If nothing else, the story gives me a work-related reason to go down to Atlantic City. I don't really want to go down to the casinos, I have to do it for the sake of the blog . . .

The article tells the story of a tiny lot sandwiched in between Trump Plaza and Cesar's Palace. It is zoned for gambling, which the post notes "doesn't exactly seem like the highest and best use." But, the lot has some history, as it was at the center of a high-profile takings case from the early days of the once booming (now not really booming) gambling mecca:

Vera Coling and her husband bought the property in 1961, when Atlantic City was still a thriving beachtown. A decade later, as the city fell into decline, it made the drastic decision to legalize gambling and welcome big-time casino development. The prime location of Coking's three-story house quickly attracted the interest of the real estate industry. In 1983, for example, Bob Guccione (the founder of Penthouse), offered to purchase the house for $1 million to build a casino. Coking said no.

Soon enough, the property attracted the attention of another tycoon – Donald Trump. Unlike Guccione, Trump had the local redevelopment agency attempt to acquire the property through eminent domain for $250,000, a much reduced price. Coking sued Trump and the redevelopment agency, claiming that the taking was not for a public purpose. The Superior Court in New Jersey agreed with Coking. It ruled that because there were few restrictions on what Trump could do with the property, there were "no assurances that the public interest will be protected."

The post notes that the arguments raised in the case are "[o]f historical interest for property profs" and other folks interested in takings, because it was "the Institute for Justice's first test case for the theories it later advanced in Kelo [v. City of New London]," the controversial eminent domain/takings case decided by the U.S. Supreme Court a few years back.

Also of historical interest is the interview with Donald Trump embedded in the post, which presents a much younger, pre-Apprentice, less coiffed, but no less pompous, version of the Donald.

Finally, in case you are interested, the property is for sale. Here is the listing. It can be yours for only $5 million, or slightly less than what this guy took from the Tropicana in a marathon gamling session a few weeks ago.

How Lady Gaga Keeps Her Poker Face And Avoids The Paparazzi When Looking For An Apartment

by: Peter J. Gallagher

The New York Times recently reported on the lengths celebrities go to in order to maintain their anonymity when buying property in New York City ("Keep My Boldface Name Out Of It"). Real estate brokers interviewed for the article described signing confidentiality agreements with clients, taking them to view apartments in the dead of night, and employing code words for their clients in order to avoid the ever-prying eyes of professional celebrity watchers. They also described a tactic that is becoming more popular with celebrities, purchasing property in the name of a trust or limited liability company to hide the identity of the true owner, as in this example of a famous tabloid friend:

[W]hen Jennifer Aniston — whose search for a home in Manhattan was chronicled with the same intensity as every change in her hairstyle and relationship status — reportedly settled on a West Village apartment last month, her name appeared nowhere on the paperwork.

But her dog’s did. As was widely reported, the corgi-terrier mix (who has since died) lent his name to the Norman’s Nest Trust, which purchased several apartments in a building on West 12th Street; Bruce Lagnese, Ms. Aniston’s business manager, signed the documents.

Increasingly, however, celebrities are not alone in seeking to hide their identities. The article notes that "Wall Street types are more eager than ever to keep their multimillion-dollar real estate deals away from prying eyes," both because of the "public scorn" with which many are held and, more importantly apparently, to protect assets from their spouses in case their marriages "hit the rocks."

The article does note that not all celebrities hide from the spotlight as they apartment shop. Courtney Love shared nearly every aspect of her search for the "perfect downtown town house" through correspondence with the editors at Curbed NY and through Twitter. In case you are wondering, she settled on renting a cozy place on West 10th Street for $28,000 a month.