Scam Affecting Tax Deed Investors PT2

PT 2 (Sky Development Scam Affecting Florida Residents and Investors)

Many who purchased lots from Sky but obtained construction mortgages elsewhere found themselves in dept without relief as they did not legally own the parcels on which the mortgage secured.  The true property owners were required to file a quiet title action to nullify the mortgage and interest of Sky or risk the loss of the property due to foreclosure. Legitimate title companies were required to honor the insurance they had issued and in many cases had to reimburse debunked land purchasers, as many of the lots were resold by investors and Sky.  Deposits were lost, escrowed funds were disbursed, contractors were unpaid, mortgage companies were foreclosing on property not owned by Sky, title underwriters were forced to shell out money, and partnering corporations had losses. 

Where legal status of ownership was completely disemboweled, the lots were changed in zoning from SFR (single family residential) to DRA (drainage retention area) as to make the property undesirable and unbuildable.  I believe this occurred in fewer than 20 parcels and this came to my attention through my tax deed research. 

In 2008 many lots previously having been conveyed by Sky were auctioned at the tax deed sale.  In the research it was discovered that most of these lots were in disputes over ownership as Sky had conveyed them to more than one party, there were mortgages encumbering the property, and the original owner could not be located.  Without original owner verification, the deed to Sky could not be authenticated.  This was occurring at a time when the properties value had plummeted from $35,000 to $8,000.  So, in those few instances where severed ownership would need be granted and the original owner unfound, the zoning was changed and the property tax deed auctioned.  This would create a single entity in ownership of the property, the county or a tax deed investor. 

Inevitably, some of the parcels though being zoned DRA were still purchased by unaware tax deed investors who had looked at the prior years zoning, finding the property value at $15,000.  The actual value of a SFR zoned lot at the time was $8,000 and being further hindered by DRA zoning the lot was valued at a few hundred dollars. Most of these lots sold at auction for $2,400.   

And while unfolding, the Sky Development members sat upon an international flight with raised vodka in hand and fraudulent passports providing safe passage to a non extradition country. 

How did these individuals acquire such in depth knowledge of our system in order to manipulate it?  In just 3-4 short years they were not only able to open businesses; they were able to operate illegal operations which are government licensed.  They had to have great knowledge of lending practices, development and construction, legal principals, business law/accounting and our tax system.  I’m no conspiracy theorist, but it does seem unlikely that they did this on their own. 

In respect to tax deed investors, it has universally made it more difficult to obtain title insurance on tax deed property after completion of the quiet title action.  But, if all of your motions and pleadings are in order and with all defendants properly named and notified, the insurance will typically be issued.  It is unnerving to get to the end of the process with buyer in hand to find title insurance issuance is the stalling point.  With a little patience, some questioning and diligence these issues can be resolved.  Unfortunately it does not always happen before the buyer walks, leaving you no choice but to relist the property.  Aggravating and time consuming to tax deed investor, yes it is.