This is wrong and sets a BAD precedent against investors...

25 Replies

@Tom Chen I read abut this when it first hit the news earlier this year. Terrible to see it play out this way. I was rooting for them, even though it was an uphill battle. They 100% bought the street fair and square though a tax sale. It shows what knowledge, diligence, and patience can get you. Not going to lie, made me do and see what, if any, goodies were for sale in cities around me. I can sadly report, I didn't find any streets available. 

The Board of Supervisors punted this one and should be ashamed, but I have a feeling either it will be over turned on appeal or settled out of court. I hope everyone who has lost property in a tax sale files to have the sale overturned by the Board of Supervisors and when they fail to hear their case, they get sued 10 ways to Sunday. If you do it for one you should do it for all.

From what I have read, I don't think the facts merit an accusation of race/ethnicity discrimination though. Anyone who bought this property would have faced the same backlash. Its more of an issue about different laws and benefits depending on who you know.

I haven't found out if the Michael and Tina got their money back with or without interest? Something tells me the city didn't pay them any interest...

The sale could probably be challenged under antitrust anyway as as a unilateral monopoly

They bought the entire street from homeowners that didn't know they owed taxes? How did they not know they owed taxes? Can someone break this down because this sounds too ridiculous to be true.

It purely depends on state/county laws for tax sales. Here in FL, failure to update a current mailing address, and thus not being served, is Not a defense to overturn a tax deed sale. In some states it Is grounds for reversing the sale.

In general, I believe there should be relatively few laws, but that they should be religiously adhered to.

If it was purchased legally, it was purchased legally.

If people who looked like them had been allowed to buy it before 1948, maybe it wouldn't have turned out so messed up? ;-/

As someone who has done things fighting racism/bigotry/etc., I actually think that the investor knew this would eventually get headlines, and wanted it exposed. On a smaller scale, I have used similar tactics, so I got the "vibe" that this was the case in this situation.

Originally posted by @Cody Evans :

They bought the entire street from homeowners that didn't know they owed taxes? How did they not know they owed taxes? Can someone break this down because this sounds too ridiculous to be true.

The HOA forgot to pay the street taxes because the bills were sent to an old address.

Originally posted by @Bill F.:

@Tom Chen I read abut this when it first hit the news earlier this year. Terrible to see it play out this way. I was rooting for them, even though it was an uphill battle. They 100% bought the street fair and square though a tax sale. It shows what knowledge, diligence, and patience can get you. Not going to lie, made me do and see what, if any, goodies were for sale in cities around me. I can sadly report, I didn't find any streets available. 

The Board of Supervisors punted this one and should be ashamed, but I have a feeling either it will be over turned on appeal or settled out of court. I hope everyone who has lost property in a tax sale files to have the sale overturned by the Board of Supervisors and when they fail to hear their case, they get sued 10 ways to Sunday. If you do it for one you should do it for all.

From what I have read, I don't think the facts merit an accusation of race/ethnicity discrimination though. Anyone who bought this property would have faced the same backlash. Its more of an issue about different laws and benefits depending on who you know.

I haven't found out if the Michael and Tina got their money back with or without interest? Something tells me the city didn't pay them any interest...

 On the surface, and without this history of this street, I might be inclined to agree that this doesn’t have anything to do with discrimination. 

But dig deeper into the history of this street and it unveils the disgusting origins of WHY this was such an “exclusive” neighborhood. 

that area is full of very wealthy and very powerful people who are VERY well connected. I mean you had a Senator (who previously lived there) write a letter on their behalf to overturn the sale.

Less bias and maybe more useful info here:

https://sf.curbed.com/2017/11/29/16715078/presidio-terrace-sale-overturned-supervisors-rich-residents

@Tom Chen maybe or maybe not. Though I doubt many, if any residents, bought their homes prior to 1948.

What I think we all can agree on is that having one of the state's sitting US Senators,  who was the Mayor of the city of 10 years, write  to the Board of Supervisors   "In the United States of America, no one should lose property at the hands of the government without knowing about it." is a gross overreach and undue influence.

The Washington Post pointed out this isn't the first time this has happened. "The neighborhood association first defaulted on the street in the 1970s, according to the San Francisco Chronicle. It got the title back in 1985 — and then immediately fell into arrears again." 

The city's on tax assessor says according to law "Taxes are owed whether a bill is received or not." How can a town that willful ignores it's own law expect to keep the trust of its citizens and business?

There are so many things wrong with this case.

Since when is forgetting to pay any kind of tax or car tab fee or business license renewal a valid legal defense?

I hope the new street owners make whatever profits the free market will bear!

Originally posted by @Tyler Mullen :

Since when is forgetting to pay any kind of tax or car tab fee or business license renewal a valid legal defense?

I hope the new street owners make whatever profits the free market will bear!

 it's more likely they'll get drowned in a legal battle where the other side probably has literally unlimited resources..

@Bill F.  in SF there is precedence for this.. I remember a case back in the late 70s early 80s were someone bought a home in SF at tax sale.. for lets say 20k and it was worth 400k.. remember SF prices have always been pretty strong.

well it was a little old lady of course .. and the sup's with public pressure did the same thing and over turned it..

AS long as an action is taken within one year of the sale they can get overturned.. we bought a church property one year at tax sale and we lost it.. got it overturned at court..

And here in Oregon sup's can also over turn a tax sale friend of mine did that last year

this one even gets better.. the tax sale of course wiped out the mortgage.. then my buddy helped these people appeal to the sups who granted it and deeded the house back to them.. San's the mortgage.

you live long enough in this business to see all sorts of weird stuff.

I just bought  a property in Washington last year were the bank waited to long to foreclosure and just deeded the property to my seller.. weird but it happened.. had never seen that before either.

Originally posted by @Jay Hinrichs :

@Bill F.  in SF there is precedence for this.. I remember a case back in the late 70s early 80s were someone bought a home in SF at tax sale.. for lets say 20k and it was worth 400k.. remember SF prices have always been pretty strong.

well it was a little old lady of course .. and the sup's with public pressure did the same thing and over turned it..

AS long as an action is taken within one year of the sale they can get overturned.. we bought a church property one year at tax sale and we lost it.. got it overturned at court..

And here in Oregon sup's can also over turn a tax sale friend of mine did that last year

this one even gets better.. the tax sale of course wiped out the mortgage.. then my buddy helped these people appeal to the sups who granted it and deeded the house back to them.. San's the mortgage.

you live long enough in this business to see all sorts of weird stuff.

I just bought  a property in Washington last year were the bank waited to long to foreclosure and just deeded the property to my seller.. weird but it happened.. had never seen that before either.

 The new owners actually held on to it for 2 years if I remember the original article. And STILL California is screwing over these guys. 

@Tom Chen   welcome to liberal SF  LOL...

it looks like they were leaning on other cases where residents weren't "properly" notified ........ 

https://sf.curbed.com/2017/9/6/16263614/presidio-t...

If I rememeber right the address was outdated by like 20+ years to a CPA or something office who basically had no record of being at the address...  not that it makes it right, but it's still odd.

@Jay Hinrichs very interesting. Also sad, but interesting nonetheless. The big bad REI Kicking the proverbial little out of her home under pressure I can understand, but saving the super rich from a husband and wife team. Bold choice on the board's part. That's why it pays to learn niches like tax sales from someone who like you who has done it.

@Matt K. sadly has the right point, the former owners will get drowned in legal costs unless a firm takes on the case pro bono or nonprofit, like the ACLU, sees larger merit in the case. When the town says 

"Sale of property by the tax collector may be rescinded by the Board of Supervisors if a hearing is scheduled and notification is provided to the purchaser. [...] There is no codified process or current policy for how this hearing and consideration of the rescission should occur"

You pretty know there are no rules to the game and the deck is stacked against you.

I'm curious how long it will take to see that they their laws and style of government prevent business from wanting to enter into their market and at times seem to actively drive people out?

They'd probably of made some good money had they kept this private, once it hit the press... game over. That neighborhood doesn't want to be in the spotlight, but they REALLY don't want to be made out to look like fools.

Wonder if this could take another twist though, could the city take this over via eminent domain? Big part of that street being private is they don't (or didn't) let just anyone come through the gates. Or to make it SF wired... turn it into one of these http://sf-planning.org/privately-owned-public-open-space-and-public-art-popos

So ... bought it for $90,000 ... offered to sell it back to the homeowners the night before the hearing for $950,000 ... argued that she never meant to try and profit off the homeowners.

LOL

I would side with the HOA, so long as the laws in fact allow a repurchase consideration. If the local laws do not, then I think there is a whopper story here and the racial angle is icing on the cake.

Delinquent tax payments are IMO best addressed exactly how they usually are, with penalties and interest, not foreclosure. Foreclosure ought to be a last resort, in the event the owners do not have the ability to pay, after reasonable chances to come current have been offered. Property rights are important and they should not be so easily taken from someone.

It seems true that the HOA neglected to update their address and pay their taxes. Someone in the HOA should have noticed this. It also appears this happened to the HOA before, which makes the second time even more strange. While it appears the couple bought the property fair and square, it also appears the HOA got it back fair and square (assuming the law allows this).

To me, this is a lesson to be learned for the REI, to find out the laws around tax foreclosures in your state. I wonder how much it cost the couple to go through all this.

PS - The back tax amount was less than $1000

The problem is the owner didn't physically reside on the property. It was an HOA. In a typical tax sale, the mailing address matches the property address. The city should have posted notice at the property. Like when a house is being foreclosed, they post notice on the door. If they had posted notice on street sign, likely one of the home owners would have seen it.

The other problem is that without the street, the properties could be land-locked. In a case like that the zoning office may just offer some sort of easement to access the homes on the street anyways. Or as others pointed out, the city could take the street through eminent domain.

The people who purchased the property were obviously either planning to rent or sell the property back to the home owners. I have no problem with that, but for them to claim they intended to not make a profit hurts their credibility. They had to know there would be a legal fight, so my sympathy on goes so far.

As far as the racial aspect, if a white guy purchased the property, this would have played out exactly the same.

It seems the city was way undercharging for the taxes on this property. If the bill was $1000 over 20 years, that is $50 per year. The road is obviously work $100K or more.

I do have issue with the city taking property back after it was legally purchased, but the sad truth is we don't really own the land under our feet. We pay for it and then rent it in the form of property taxes. The government can take it back whenever they want and pay us whatever they think it is worth.

If it’s a matter of legal resources they should look for a group to take their case to set precedent, there are many groups non-profit and volunteer groups out there.  I had a clients case we took to a group like this and they helped us win against a trustee re: improper foreclosure and consumer protection laws.

This is really a legal issue that was handled in a political way. The real issue now is, was the tax foreclosure process handled properly. The city would have had to have done a modicum of due diligence to serve the HOA. You cannot take a property for non payment of taxes without serving the people who have an interest in the property. (See the Mennonite Board of Missions V. Adams case) Did the city follow the rules of service in CA?

IF the HOA was not properly notified then it should have been overturned. IF the HOA was legally served they it absolutely should not have been overturned. Either way, that was a decision for the courts not elected politicians. 

It would not surprise me if one or more of the residents had racial animosity due to the areas racist history. However you cannot assume that was the case. Those racist restrictions were eliminated many decades ago. It is not fair to jump to the conclusion that current residents are racist just because distant past residents were. 

I also suspect that the politicians that decided to reverse the sale, were not being prejudiced against Asians as much as they were being favorable to rich and powerful people. 

@Wayne Brooks I suspect the US Supreme court "Mennonite" standard would apply despite state laws. 

@Terry Miller

If it was purchased legally, it was purchased legally.

Agreed but if the city did not follow legal procedures, the tax deed was not legal in the first place. 

@Tom Gimer the flip side of your point is the HOA didn't pay taxes for 30 years, and had already been in tax sale so they knew non payment of taxes is an issue. To claim they didn't know taxes had to be paid, and they didn't know that they hadn't paid them is a silly argument. Of course neither you point nor mine would go very far in court.

@Joe Splitrock one article said the taxes were only $14 a year.  Personally I think it is appropriate Karma that they pay for the benefit of such an outrageously low tax assessment with loosing the property due to their own negligence.  In Baltimore the the expensive areas with a higher percentage of whites, tend to have proper or low assessments whereas the poor predominately black areas are grossly over assessed. I find it interesting that the poor are screwed in a city run by liberals.

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