Don’t Get Bit By Flipper Flipping Houses

Flipping Houses

Picture of a dolphin for a blog on flipping houses

It seems like every bad idea gets discovered by a new generation of hucksters and marks. Wherever there is a buyer’s market in real estate flipping houses becomes popular and very well may work for the flipper in some cases. 

There is usually a distressed property that is on the verge of foreclosure or has some defects that prevent sale at full market price.  The flipper buys the house for a discount and then puts the minimum of superficial work into it required to sell at a profit. If the market is hit just right the profit may be substantial.

Flipping the Property Condition Disclosure Checklist

This may however, turn into a nightmare for the buyer as well as the flipper. The State of Washington requires a seller to complete a Property Condition Disclosure checklist and provide it to the buyer before the sale is completed. Any defects or hazardous conditions known to the seller must be disclosed.

Further, even knowledge of a small defect, such as a spongy floor, will make that seller liable for anything investigation of that defect would reveal, such as extensive dry rot or mold.  The flipper may become liable for any undisclosed defects at the cost required to return the property to the value at which it was purchased.

How Do You Know If You’re Dealing With a Flipper?

An obvious tip off is length of ownership. This information can be obtained from the county assessor’s or auditor’s office.  If the house has only been owned for a short time, pay extra attention to its condition.

A buyer should also have a house inspected by a professional home inspector before buying.  Any extensive new sufaces such as paint, wall paper, drywall or flooring, may be hiding a deeper defect.  Be sure to test all fixtures, appliances, plumbing, heating and electricity before buying.  In older  homes it is especially important to know whether knob and tube elecrical wiring, lead pipe or asbestos will make it difficult to insure or require additional work to sell with FHA or VA financing.

The lack of a real estate agent and a closing agent and seller financing on a real estate contract may also be worrisome, especially if a large down payment is required.  Lack of a title insurance policy is a red flag that should never be acceptable in a legitimate transaction.

Even work done without a permit may be a clue.  You can check the permit file at the City or County office of building and planning. Unpermitted work may also result in an inability to qualify for FHA or VA financing.

If The Deal Is Too Good, It’s Too Good

Remember that a too good to be true deal probably is, especially in a changing market.  Take your time and do your homework, including hiring a professional inspector.  Don’t get in a hurry or you might get bit by that smiling flipper.  An attorney can help you sort through these issues including research into title records, assessor’s and building permit records, as well as monitoring the sale to be sure the proper documentation is used and all transaction taxes and real property taxes are paid paid in closing.

Adverse Possession – Get Off My Lawn Part 2

In Where Get Off My Lawn Becomes Get Off My Dock – More On Adverse Possession

Adverse possession know your rights

Image courtesy of Photokanok / FreeDigitalPhotos.net

When your neighbor at the lake puts his dock in your square foot of second class shore land the gauntlet is seriously thrown down. Then he’ll build an addition to block your view, shine his porch light in your bedroom window, and fill your locks with glue.  This was the case with Green v. Hooper, where the case was further complicated by conflicting surveys.  There are two accepted methods of extending boundary lines into shore land.  One simply extends the line on the same bearing over the shoreline.  Another method is however, used to account for curving shorelines.  In that method, the lines are drawn to the center of an arc created by the natural curve.  When and how these methods are used may represent a difference of opinion between surveyors and experts at trial.  In the case of Green v. Hooper, the alleged encroachment was minimal, but the case cost hundreds of thousands of dollars to resolve.

The appeal court decided that the trial judge did not have sufficient evidence that a border made of railroad ties was intended to mark the true boundary.

 Take A Survey To Find Out Where Your Lawn Really Ends

In any case, however the first step is to order a survey.  Preferably, the survey will show the disputed line(s) and the location of structures, fences, docks, relative to the line(s). This costs money and might actually prove you wrong.  However, a Seller is required to disclose a dispute or discrepancy in the Seller’s Real Property Disclosures, Chapter 64.06 RCW, now applicable to commercial property and unimproved property as well as residential property.  And your title policy won’t cover a boundary discrepancy without a survey and will not cover something not in the record.

But the Seller must resolve the matter in order to sell the property, or even pass it down to the kids, without the dispute.  If the neighbors are reasonable, you may not need an attorney.  A survey is however, always advised even if to describe an agreed boundary line and record.

Bringing Out The Worst In People

But the situation brings out the worst in people because a man’s home is his castle from the depths to the heavens. When you order the survey, your neighbor might pull up stakes and scare the surveyor off.  You are getting ready to pour concrete on a 100 foot retaining wall and he gets a TRO as the cement trucks pull up.  He finds an old survey or gets a new one that contradicts yours, claims he’s been mowing that spot and planting posies for years, his grandpa had a pig sty right there and all the old timers remember that hog that won the blue ribbon.  And by the way, the original patent described one corner as at the big tree or on a rock with a chiseled cross.

One of the best stories in Washington comes out of the Entiat River, Thomas v. Bremer, Cascade v. Bremer, United States v, Bremer where federal judge Alan McDonald explains in an unpublished opinion the “whiskey survey.” In the 1880’s certain government surveyors, not so brave as our modern types, were afraid to get out the boat because of wild animals and native Americans, so they marked only the corners at the river, filling in the rest at the bar in the evening.  This meant that original patents described parcels that varied widely from proper surveys.  Settlers came in and staked out their land which differed from that actually described.  The gov’t conducted a resurvey of the land as it was staked by the settlers.  This survey was not however recorded.  Subsequent owners then could rely on the original survey to claim property outside of the boundaries of the resurvey.  In the case with Thomas, which we handled, the theory of adverse possession was dismissed because Bremer had actively disputed Thomas’s claim with lawsuits and tearing down fences from the beginning.  The claim was therefore, not “continuous.”

 Because the Thomases’ property tax receipts cover property in sections 15 and 23, whereas the Bremers’ receipts cover the SW ¼ of the SW ¼ of section 14, the Thomases cannot establish an adverse possession claim under the seven-year rule of RCW 7.28.070. They also cannot establish exclusive and uninterrupted possession of the nine acres given the multiple criminal and civil trespass complaints brought by the Bremers against them, the destruction of every fence they put up and the Bremers’ assertion of their ownership rights in the property for more than 20 years. Thomas v. Bremer, 88 Wn. App. 728 (1997)

 

Adverse Possession: Open and Notorious

This brings us to the factual elements that a claim of adverse possession must satisfy. The claim and use must be open, notorious, hostile, and continuous, under a claim of right, for the statutory period.  In other words, continuous until the statute of limitations of ejectment/quiet title has expired, 10 years in Washington, 20 in Idaho.  The use must be such as an owner would make of it for the whole time.  Leaving a field fallow, or unused under an open space or timber designation would still be continuous if that’s how an owner would use it.  Periods of unbroken adverse use by subsequent owners can be tacked together to equal the statutory period.

The factors of open and notorious use simply mean that the use is such that the possessor is not trying to hide it and that the use is known in the community.  An owner is assumed to have actual or constructive knowledge of such use.  Hostile does not mean animosity, but such use that would not be allowed by an owner without permission.

A permissive use cannot ripen into adverse possession unless the permission is expressly withdrawn and the use continues for the statutory period.  Likewise, an adverse use that is abandoned for the statutory period may be extinguished.

As this court stated in Miller, the adverse possession doctrine arose in order to assure the maximum utilization of the land, encourage the rejection of stale claims, and quiet titles.[11] But courts will not permit the ” theft” of property by adverse possession unless the owner had notice and an opportunity to assert his or her right. Therefore, there is no presumption in favor of the adverse holder because possession is presumed to be subordinate to the true owner’s title.[13]

Adverse possession requires 10 years of possession that is (1) exclusive, (2) actual and uninterrupted, (3) open and notorious, and (4) hostile. ” The ‘ hostility/claimofright’ element of adverse possession requires only that the claimant treat the land as his own as against the world throughout the statutory period.”Hostility is not personal animosity or adversarial intent, but instead connotes that the claimant’s use has been hostile to the title owner’s, in that the claimant’s use has been akin to that of an owner.

Permission to occupy the land, as given by the true title owner to the claimant, will negate the hostility element. This means that use of the land with the true title owner’s permission cannot be hostile. Therefore, ” ‘ a different set of rules applies when the initial use is permissive.’ ” The party claiming adverse possession bears the burden of proving that permission terminated. ” Because permission is personal to the grantor and cannot extend beyond that person’s ownership, the relevant viewpoint for determining when permissive use terminates is that of the party granting the permission.” (internal citations omitted) Herrin v. O’Hern, 168 Wn.App. 305 (Wash.App. Div. 1 2012)