Key West Horror Story No. 4 - Once Removed

Long before I moved to Key West I did commercial loan workouts in for a bank in Denver. My job was to recover money from borrowers who lost their way in life and who refused to give back the money that they borrowed. This was at a time when character still mattered and failure to repay a debt went down on one's permanent record. My job entailed the management of outside bank litigation, foreclosures, recoveries of all types, and the sale and disposition of real estate acquired through foreclosure. Recovered assets were classified as OREO (other real estate owned) by our bank. Some banks refer to these assets as REO for real estate owned.

Another asset manager in my department had started to foreclose a town home in Aurora located near the Cherry Creek Reservoir. For some reason I never understood, he initiated the legal process to foreclose but them abruptly stopped. After he left the bank, I inherited some of his problem loans including this one.

I reviewed the file and assumed this unit must have been abandoned by the owner after the foreclosure was filed. I drove to the property to verify my suspicions.  I went around back and looked through sliding glass doors and saw the place was fully furnished. I saw dog moving about inside. I went back to my office and verified with the Public Service Company (the electric utility company) that service was terminated a year earlier. I called the condo association and learned that water had been shut off a year earlier for non-payment of association fees. I contacted outside counsel and got myself appointed  a receiver to preserve the property during the foreclosure process.

With court order in hand I went back to the property a few days later and met a locksmith who got me inside. A cat disappeared from view as soon as we entered the house. The dog I saw on my earlier inspection was not to be seen. But evidence of the dog's existence was everywhere as there was dog poop on all three floors of the condo. There was dog poop and urine smell everywhere--even on the walls where the dog did his business. The house reeked! The smell was overwhelming.

But the place did not seem to be totally abandoned. The house was fully furnished.  There was a baby grand piano in the living room. The dining room had a formal dining room table, chairs, and breakfront. There were three fully furnished bedrooms. There were pots and pans in the kitchen and clothes in all of the closets. There were remnants of burnt candles all over the place with candle wax on tabletops. The place had a really creepy feel about it. It was as if the house was the setting for some graphic horror novel.  Empty plastic milk cartons littered the house. I assumed the owner brought water in for the pets. I could not imagine humans living in such filth. And there were family photos of the people who lived in this house. The woman was head of Colorado Right to Life at that time. I will never forget that. Never!


I went upstairs and found what I thought was a pool of dried blood in one of the second floor baths. I left the house and called the police. (This was over thirty years ago - long before we had cell phones.) The police came over right away. They quickly determined what I saw was not blood but rather feces and urine from the commode that leaked out onto the floor.. One of the officers refused to go into the basement. There was so much feces on the floor that it was disgusting beyond your wildest imagination. Stephen King could not have written a more horrific tale of a foreclosure from hell. In fact I named the "asset" Cujo OREO because if reminded me of Stephen King's novel about the dog from hell. Foreclosures are our bank were always named for the owner of the foreclosed property.

I called animal control. They captured the cat and took it away. The dog was never found. 

I hired contractors to take out all of the filth and put the place in saleable condition. They had to haul out all of the personal contents. The Salvation Army refused to take most of the furniture and personal property because of the smell. I guess the contractors took most of the stuff to the dump. I remember them telling me they had to wear masks while removing the personal property and while ripping out the interiors. They had to tear out the bottom four feet of drywall throughout the unit to get rid of the urine. The urine had penetrated the floors so badly that the floors needed to be removed down to the floor joists.

They replaced the floors, drywall, and most if not all of the cabinets, appliances, and plumbing fixtures. The place was painted and put in saleable condition.

This was the very worst foreclosure I ever encountered. But I have seen a lot of them over the years. A lot of people who lose their homes destroy the house as they walk out the door. They blame other people for what happened to them.  I could blame the dog for all of the poop and pee. I could. But I won't.

Key West Real Estate Horror Story No.1

People who read my blog are typically looking to purchase a home in Key West. They usually find my blog by searching an address after viewing a property on Zillow, Realtor.com, or even the real Key West mls website. These new prospects often read additional blogs I have written to get a sense of who I am as a person and the services I may be able to provide to them.

Many readers think that they can get a deal by buying a bank owned home because they think they'll get it at a bargain price. During the past couple of years some bank owned properties have been offered for sale via several online auction websites.  I have helped several buyers purchase homes through these sites. One particular online auction turned into a real estate horror story.

I registered the buyer and myself as his agent so that I could be a part of the process and earn a commission if the buyer was the successful bidder. I read the TERMS before signing up.  I warned my buyer up front that the standard Florida Purchase and Sale Contract would not be used but that the contract written by the online auction company would be used instead. That contract was totally written to benefit the bank as seller. I used to be a lawyer. The law describes this type of contract as a contract of adhesion. The thing is if a buyer wants something so badly, he'll probably sign anything just for the chance to get a good deal.

My buyer was the successful bidder in a particular online auction. Thus began the saga that became a minor real estate horror story. After my buyer's bid was accepted, the buyer was required to sign the bank prepared purchase contract - the contract of adhesion I mentioned above. I did my part by providing all the documentation to the bank asset manager who is located in a faraway town.

My buyer was paying cash so there was no third party mortgage involved. The house itself was a total mess. My buyer did not do an inspection as the buyer planned to do a major renovation.

Within the first week or so we received a preliminary title report which showed that the law firm that foreclosed the mortgage omitted a necessary party to the foreclosure' This required the attorney to do a new foreclosure the omitted party. This set back the closing date by several months. Just about the same time my buyer became aware that someone had complained to City of Key West Code Enforcement about yard debris and trash in the front and back yards on the house upon which my buyer had a contract. The City of Key West Special Master imposed a daily fine of $250 on the property until such time as the mess was cleaned up and the fine paid. I got a copy of the FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER and emailed a copy to the listing agent, asset manager, and closing agent all located at the same address in the faraway Florida city. All of the asset management people and title people had Muslim last names except for the real estate agent. I checked with the Florida Real Estate Commission - he is a real person who lives in Florida.

 When neither the listing real estate agent nor the asset manager responded to me, I called both. I left a voice message for the real estate agent. The agent never returned that call nor did he ever respond to any email I sent to him. When I called the asset management company I asked to speak to M**** Mohamed, the asset manager. The first person I spoke with sounded far away, much farther away than the address in Florida where the asset management company's office was located. It was as if I was talking to someone on the other side of the world or that I was speaking on a tin can phone or both. I was asked to call back at a later time. I did and that is when I spoke to Mohamed. I knew then what I suspected earlier that I was talking to someone in India or Pakistan and not in Florida.

I told Mohamed about the code violation and ongoing fine. He asked me to send him a copy of the FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER which I had previously sent to him. I did. Then we began a series of email correspondence about the ever-growing fine.  A few weeks into the process Mohamed assured me the problem had been resolved. He said he initiated a process to hire a vendor to clean up the yard.  During the meantime my buyers left town for a previously planned vacation. I drove by the house to see if the place had been cleaned up. The front yard looked okay but I could see trash in the side yards. I went to the backyard where fallen palm fronts and other debris littered the yard. I took photos. Then I went to City Hall to speak to someone about the property. I was informed that the city would hold my buyer responsible if the bank owner did not clean up the mess and pay the fine by the time we closed.

About five months had passed since the new foreclosure was started.  The title agent emailed me a notice the bank was ready to close. I sent emails to Mohamed and others at the asset management company stating that the code violation constituted a title defect and that the buyer required the bank to pay the fine and get the code violation cleared. Mohamed and the title agent sent a series of written in English but which either intentionally or accidentally never stated that the bank clear the code violation and pay the fine before closing.

I re-read the bank purchase contract (the contract of adhesion). The contract specifically excluded the bank as being responsible for any code violations. I then engaged a local law firm to write a letter to the bank asset manager and title company reaffirming the buyer's position that the code violation constituted a title defect.  Mohamed and the title agent became more responsive to the lawyer who communicated in a non-threatening manner but simply required the bank to clear the title defect before closing. I went to city hall and got a form by which the bank could seek to mitigate (reduce) the amount of the fine which by then had risen to over $20,000. Remember the fine was $250 per day.

I sent the mitigation form to Mohamed who said the contractor he hired to clean up the yard had done so. I told him that whoever he hired picked up trash in the front yard but not the side yards or back yard. I told him emphatically not to mess the government. He finally got the message. The bank extended the closing a few extra weeks so that it could appear before the Special Magistrate to mitigate the fine. The yard was cleaned and the fine was reduced to only $15,000. The bank paid the fine at closing.

But that's not the end of the story. The TERMS disclosed at the online auction site were less than forthright in disclosing all the fees that the buyer would be required to pay. The biggest and most offensive non-disclosure appeared when we received the preliminary settlement sheet. The buyer was required to pay the Seller's State of Florida Documentary Stamp Tax which is calculated at 70 cents per one hundred dollars of sales price. This is always a seller cost, but under the bank's contract shifted this expense to the buyer. While the bank paid the title policy, all of the other title closing costs were likewise shifted to the buyer. The buyer's sole remedy upon learning all the associated fees would be to walk away from the contract, lose his deposit, and not get the property. Buyers do what buyers do: they suck it up and pay the fees.

My buyer closed on the property and got a really good price on what will end up being a very nice home once the renovations are completed. It could have ended differently, however, had I not kept pressing the bank to clear the code violation and pay the fine.  I can't help but wonder if anyone at the real bank with all the Billions of Dollars in assets has any knowledge that the bank asset management company in Pakistan or where it is that Mohamed lives cost the bank $15,000.