I bought my first home, only to become a victim of predatory remodeling.

This is the story of how I got tricked by malicious criminals into purchasing a home that was riddled with code violations and faulty, unsafe conditions. The house flippers were not licensed contractors, and no building permits were pulled. There was no paper trail, and no way for my house inspector to detect the multitude of problems that were cleverly hidden behind beautifully finished drywall, concrete, and woodwork. Richard Wu commits real estate fraud!

In The News
Remodeling Magazine
Sun Focus Newspaper

May 20, 2013

I closed on my first house! $174,000 with 4 bedrooms, 2 full bathrooms, attached garage, and 2,170 square feet.

Soon, my family and I moved into our new home with the help of friends and relatives. It was beautifully finished from top to bottom. We were so excited to own our first house!

Day 2

Like any responsible home buyer, I had the property inspected before purchasing. One of the few things my inspector found was that this bathroom fan was not ducted through the roof, so it was blowing moisture into the attic. We promptly had it replaced by a professional.

Day 3 - Subtle Hints

But soon we began to notice lots of strange problems with our new house. At first, they were small. For example, this cupboard door that was never attached to its hinges.

And the hookup hoses for our laundry machine were connected backwards. (Hot water connected to cold input and vice versa.)

And none of our cable outlets were working. We called our service provider who sent out a technician. He discovered that none of the outlets were hooked up to the household service!

Day 10

The handles fell off the bathroom faucet...

...and the drain lever had missing parts underneath the vanity, so it didn't work.

Several rooms had dipwire shelves that were not attached to the studs! When we put any amount of weight on them, the shelves simply tore free from the drywall. The same thing happened when hanging our coats on the coat hooks near the front door!

Additionally, a closet had handles installed on the wrong half of bi-fold doors.

Day 12 - Water Damage

Less than two weeks after moving in, I was shocked to discover a large puddle of water on the laundry room floor that was rapidly leaking through the basement ceiling. The upstairs bathroom is directly overhead.

We brought in a plumber to diagnose the problem, which turned out to be the upstairs shower manifold which was badly spraying water inside the walls.

When he took a closer look, he noticed something very disturbing: The shower manifold was soldered in-place with a blowtorch that badly burned the framing of the house!

Our plumber immediately suspected that there were many more plumbing problems and building code violations with my house, so I agreed to let him cut some inspection holes in the drywall to investigate.

The plumber discovered an incredible number of building code violations. For starters, none of the plumbing in lower level had any drain vents! Without these vents, suction keeps the drain water from ever reaching the sewer. These inspection holes showed that there were no vent pipes inside the bathroom walls.

He also discovered six additional leaks inside the walls, all due to incorrect plumbing with scraps of pex pipes patched together with copper pipes and more framing badly burned by a soldering blowtorch.

Incorrect plumbing unions were used throughout the house against building codes. The upstairs bathtub drain was illegally connected to the rest of the drain stack with T-union.

The laundry drain was illegally reduced from a 2” pipe down to 1 ½” pipe against building code.

The master bathroom shower drain was illegally connected into the wrong size and type of pipe, and had no P-trap against building code.

Incredibly, the washing machine drain was connected with a backwards Y-union, and all of the new plumbing was illegally cemented into the sewer clean-out access!

And that was just the lower level! In the kitchen, our plumber discovered this illegal air-admittance device (against code in Minnesota) instead of proper venting pipes.

The dishwasher was hooked up with the wrong type of hoses.

The garbage disposal was wired into a metal switch box without a bushing against code.

And in the upstairs bathroom, the water pipes were never fastened to the framing.

I was puzzled how any of the plumbing could have been faulty and so far out of code. Before buying the house, I checked the building permit history, and there were no permits pulled in recent years. I assumed that any work done on the house by the Seller was simply cosmetic, like paint and carpeting. But I was so wrong.

Day 14 - Online Evidence Discovered

I did some online research and discovered that our house had been purchased by a flipper on October 16, 2012 for $84,900. Over the next 4 months, the flipper secretly remodeled the house without building permits or licensed contractors until February 19, 2013. He then re-sold the property to us at a 200% markup.

The dated photos on Zillow.com show just how much the house changed during the flip. Major walls had been removed to make the house feel more open.

The front entry closet had been removed.

The galley kitchen had been completely gutted and re-done with recycled cabinetry and low-end fixtures. The adjacent dining room had a closet removed.

One of the major kitchen walls had been removed.

In the basement, the flipper removed a load-bearing support column to make the room look bigger!

Week 3 - Severity Confirmed

The flipper had put our lives and property in serious danger by removing load-bearing structures. This reckless behavior could have killed me and my family, so I called the police. The officer was sympathetic to our situation, but did not believe it was serious enough to warrant police intervention.

We needed to get an understanding of how serious the problems were, and how much they would cost to repair, so we began calling general contractors. One by one, they visited our house, and were mortified at the condition of the property, claiming that it was worse than anything you'd see on the popular remodeling TV show Holmes on Homes, and that it was clear that the illegal remodeling work was done intentionally, in a predatory fashion, to flip the house onto an unsuspecting buyer and tricking them into ownership of the multitude of code violations. One contractor even stated "Whoever did this work needs to go to prison."

Week 4

I began documenting all of our house problems on a spreadsheet, and labeling them with color-coded, corresponding Post-It Notes throughout the house.

I called our city Building Official and asked him to come see the damage. Much like the general contractors who had looked at it before him, the inspector was absolutely shocked at the level of malice that went into remodeling. He stated, "I wish we had caught these guys in the act. They'd be in jail right now." Furthermore, he ordered us to make the structural repairs quickly amid concerns that a large snow pack on the roof could cause the structure to buckle. Failure to fix the house before snowfall came with the threat that the city would condemn our house and evict me and my family.

Without any help from the inspector or local law enforcement, I moved-up to the next level of government by contacting my county attorney, and began working with a Civil Investigator. She admitted that my case "certainly sounds like 'theft by swindle'", and began an investigation into the Seller and his associates. As it turns out, the Seller took great care to run the transaction as a 1031-Exchange through the IRS, and he provided outdated contact info. Legal advisers believe that he knew exactly what he was doing, that he had committed this type of fraud before, and that he may even use offshore bank accounts.

What's more, the Seller hid all of the building code violations behind a "Seller's Disclosure Alternatives" form, which means I bought the house "as is". I had assumed that my realtor had my best interests at heart, so I expressed concern about the paperwork to him. My realtor insisted that this form was "very common", that it was "no big deal", and that if I didn't sign the form, it would definitely mean losing the house to other bidders. He coached me into signing the waiver.

With those avenues closed, we learned that our only options were to:

  • Abandon the house, forfeit my mortgage and ruin my credit for 8 years.
  • Pray for some kind of disaster, such as a fire, that would be covered by our insurance.
  • Pay tens of thousands of dollars for the repairs out of my own pocket.

It was at this moment that I realized that I had been utterly ruined. I was devastated. I could barely manage a phone call with my stunned parents, and I spent the entire night awake and sobbing.

About the Author

Frost Simula purchased his first house in Columbia Heights, Minnesota in May of 2013. When it became clear that the Seller had committed real estate fraud, Frost began documenting the nightmare of hidden building code violations, the struggle to save the property from condemnation, and the ongoing ordeal to find justice. An active citizen in his community, Frost is currently working with local, county, and state lawmakers to ensure that nobody becomes a victim of predatory remodeling again. Frost is frequently featured in the media, and maintains his Hoodwinked House website to educate the public about real estate fraud.