Why didn’t you have the house inspected before you bought it?
I did. The inspector’s job is to look around, perform operational tests, and report findings that are observed at the time of the inspection. He did just that. His report did include many items to note, but he was simply not able to detect most of the problems with the house because nearly every room was finished from floor to ceiling. He can’t see through drywall or concrete.
Why didn’t you look through the record of building permits?
I did. The last permits pulled on the house were for siding and roofing, installed in 2010. The flipper who did this work (in late 2012) did not pull any permits, so according to the paperwork, no new work had been done. If anything, I assumed that only lightweight cosmetic work had been done, such as new paint. It wasn’t until I saw photos from previous real estate listings that I discovered how much remodeling had been done, including the removal of a load-bearing support column.
Why don’t you just walk away from the house and let the bank deal with it?
This is what most people do. However, I spent 8 years rebuilding my credit following an out-of-pocket surgery that led to bankruptcy. Letting my mortgage lender deal with the house would mean destroying my credit a second time and repairing it again for at least another 8 years. I’m not willing to do that.
Can’t you just have your insurance cover the repairs?
Home owner’s insurance covers things like accidents and disasters… not faulty construction or predatory remodeling.
Why haven’t you gone through the Ethics Committee, or the Department of Commerce, or got help from the Contractor Recovery Fund?
Those approaches are good for contractors who are licensed through the state. The individual who remodeled my house was not licensed at all, and did not pull any permits for any of the work. There is no existing legal recourse against someone who was never licensed in the first place.
Why are you paying for the repairs yourself instead of going to court?
The house was unsafe and facing condemnation. I had to begin repairs quickly to bring it up to code and to prevent more structural damage. Legal proceedings and the justice system takes months if not years. I did my best to pay for repairs out-of-pocket, hoping to recoup the costs later in court. In the end, there was no legal recourse at all.
Why don’t you get a home equity loan or home equity line of credit (HELOC) to pay for the repairs?
At the time (2013), this was my first house purchase, and I had not lived in it long enough to accrue any equity. I had to pay cash out of pocket for repairs. After several years of mortgage payments and appreciation, I was finally able to get a modest HELOC in 2018.
Why didn’t you go through real estate arbitration?
Once finalized, arbitration becomes legally binding and cannot be overturned, ever. As this incident was so severe, my attorney advised me to pursue other means that offer more legal options. That was bad advice, as no other legal options ever became viable, and the statue of limitations on arbitration passed.
Why aren’t you on one of those reality TV shows like Holmes on Homes, Rehab Addict, or Catch a Contractor?
Reality TV shows are produced out of very specific locations, most of which are not in the Minneapolis / St. Paul metro area. Also, the shows need a compelling story that can be captured on camera from beginning to end in a specific time frame with all of the funding needed to finish the project. By time time this story surfaced, my home had already undergone lots of demolition, without a budget, and would take 6 years to repair, and no happy ending.
Are all real estate flippers scam artists?
No. Some house flippers rehabilitate old houses properly; obtaining permits, getting inspections, following building codes, and using licensed contractors. However, many house flippers look for cheaper alternatives over legitimate steps that cut into potential profits. There is no definitive way to determine if a house has been flipped, or if the flipper has made legal improvements.
How often does this type of real estate fraud occur?
Predatory remodeling is the most-abused type of real estate fraud today.1 House flippers commonly avoid building permits, inspections, and often hide known problems. We have heard of predatory remodeling occurring in every type of property, from condos to multi-million dollar homes. We understand that home owners are falling victim to predatory remodeling across the United States, as we have no common laws to prevent it (like much of Europe does). If you have been a victim of this type of remodeling fraud, please tell us your story. We are using this information to build a case for changing our real estate laws.
References
- Flipping is Illegal by Ron LeGrand, REIClub.com