12 ms·

A million-dollar brownstone that no one owned

247 points by bhl 8y ago

sonofblah 8y ago
Do people in general understand how incredibly rotten, rigged, and broken everything is? Imagine buying your dream house (a figurative one only coincidentally related to the article), turning the doorknob and it comes off in your hand. You flick the light switch but no lights, and it collapses into the panel. Touch the wall, and your finger pokes through. Completely broken, disintegrated, nested with termites and other creepy crawlers. The "inspectors" told you everything was fine. That is our world, and this life.
- Waterluvian 8y ago
  Your part of the world, maybe. But there's remedy to everything you described in most of the modern world.
  - fatbird 8y ago
    Exactly. Notice how no one in the story has clean hands, even the reporter who knew that paying below market rent in cash without a lease meant that something funny was going on. It's not that hard to avoid shady business (though in fact, I laud the reporter, and maybe even Eddie and Rosa, for squeezing a bit of blood from a stone).
iaw 8y ago
Well this could be a fun data science project. How much real estate fraud can you find in ACRIS?
- mikeyouse 8y ago
  Fun story; when the financial disclosures came out for the new administration, I wrote a quick script to compare Trump's LLCs to property records in NYC's ACRIS and then looked over the results by hand to see outliers. It took literally 30 minutes of my time and I found the Trumps trying to evade like $500k in taxes. Eric Trump had used two anonymous LLCs to buy properties from his father's LLC for far below market rate. He was going to combine the units with another he already owned which actually made them more valuable than simple comps suggested. There were several opportunities to disclose the related party / family transaction but they both affirmed that it was at arm's length in the paperwork that they signed. Propublica & The WaPo both published articles but I wasn't sure at the time so I remained anonymous publicly. Turns out that corruption doesn't matter and nobody cares that our president constantly commits financial crimes, so meh? The propublica article: https://www.propublica.org/article/heres-how-trump-transferred-wealth-to-his-son-while-avoiding-usual-taxes https://www.propublica.org/article/heres-how-trump-transferr...
  - intended 8y ago
    No, people care - but they are usually busy dealing with other news they are currently being overwhelmed by.
    - mikeyouse 8y ago
      It’s just amusing that if I had found something similar about the president 3 years ago instead of 1 year ago, it would’ve been front page news and would’ve likely resulted in impeachment hearings. Instead.. crickets and a couple lightly read articles. I always regarded moral relativism as a lens to judge modern culture against historical cultures and norms. It turns out that it’s much, much worse to be a ‘good’ person committing a moderately bad act as compared to a ‘bad’ person who regularly commits much worse acts. That’s a bit depressing. Edit to clarify my point: It was a major scandal when Tim Geithner had to pay $20k in back taxes that he owed from his time at the IMF, similarly when one of Clinton’s nominees for the AJ position withdrew when it turned out that she owed taxes on the salary she was paying her housekeeper, similarly again Spiro Agnew resigned from the office of the Vice President of the US over something like $8k in taxes on income he didn’t report (as well as some other corruption involving bribes and kickbacks). But millions of dollars of illegally shielded income depriving the treasury of hundreds of thousands of dollars in tax revenue during the campaign merits a shrug because there are so many other scandals.
      - deleted 8y ago
        [deleted]
      - lotsofpulp 8y ago
        Trump’s voter base would champion those actions, it’s not like it’s unknown that he’s a scumbag developer that takes every effort to cheat everyone he deals with. But the important thing is that they believe he’s on their team or one of their tribe, which allows him a lot of leeway in his behavior compared to someone on the other team or tribe, for whom even a minor indiscretion is unacceptable. Similar mechanisms are at work when a popular athlete is caught doing something, or priests, etc. Once someone’s ego becomes invested in you, you can more easily take advantage of them and that’s an important thing to learn (and wield for yourself).
- _bxg1 8y ago
  Assuming the documents are digitized, would probably be pretty easy to put together a neural network that pegs "interesting" documents for review. Not that it should be used as an authoritative judgement, but it sounds like so much stuff gets through the system just because there aren't enough eyes to check everything for the obvious markers.
8bitsrule 8y ago
A sad, amusing, enlightening article.
- asdfasgasdgasdg 8y ago
  I didn't find it all that sad. Some people got to live in a house paying below market rate for a long time. Some dude pulled one over on some dumb banks and managed to extract a lot of money from their shareholders. Some fraudulent documents got filed, but the victims of the fraud are the owners of those failed financial institutions. I guess, if any part of it is sad, that is, since ultimately that's people's pensions and retirement funds. But that's a kind of faceless and diffuse group of entities to really feel sorry for. I agree it was fascinating, though.
  - arthurofbabylon 8y ago
    You're lacking in creativity. It shouldn't be too hard to put a face to the victims: take a look around you. This kind of disparate fraud impacts all of the non-beneficiaries. That includes me, you, your aunt and uncle, etc. etc.
    - asdfasgasdgasdg 8y ago
      In fact, I pointed out the exact effect you mentioned: that this fraud caused diffuse losses. It's well documented that most humans have trouble feeling empathy in the face of statistical harms, so in that sense I'm just a normal person. It has nothing to do with creativity or understanding. I am comfortable with my emotional stance on this article. Also worth noting that, broadly speaking, the same general class of folks harmed by this practice were also helped by other "bank errors" in their favor. (By that, I mean the wealthy. People who can afford to be shareholders in banks.) So it's doubly hard to feel bad, since, by and large, the wealthy have never been doing better.
      - arthurofbabylon 8y ago
        You're "normally" devoid of creativity? Your second paragraph: you relate "general class of folks harmed by this practice" (ie everyone) with "the wealthy" ...? Can you explain that, I'm a bit confused.
rblatz 8y ago
You’d think after 10 years they could claim the property through adverse possession and clear up any “cloud” over the ownership.
- toast0 8y ago
  Adverse possession wouldn't wipe out a properly recorded lein. Of course, it doesn't seem that the lein was properly recorded. You could maybe sue the leinholder to provide proper documentation or abandon the lein, but you run the risk of the leinholder finding enough documentation to convince a judge, and making the lein valid and enforceable, instead of vaguely maybe not an issue. Or, maybe you just pay someone to "find" the documents, and hope the leinholder doesn't notice or doesn't care. This case seems murky enough that even a potential recovery of $1M might not be worth it for the leinholder.
- CPLX 8y ago
  Adverse possession is extremely misunderstood. It almost never applies to landlord/tenant type situations. The reason being that that posession is not “adverse” in the sense that the person was living there with permission in exchange for rent. Adverse possession, generally, comes into play with property line disputes, and sometimes with genuine long term squatter situations. A core and often overlooked element however is that a license or permission to use the property means you aren’t possessing it “adversely”.
- logfromblammo 8y ago
  Some states allow a civil suit against all known creditors, lien-holders, or anyone else that may have an interest in the property, forcing them to show proof of their interest, then the judge makes a declarative judgment stating who owns the property, and the obligations the owner may have to the other parties. Statutes enabling such suits are custom-tailored for removing clouds. If the lenders don't have their paperwork in order, the judge can sever the mortgage from the note, turning it into an unsecured debt.
  - deleted 8y ago
    [deleted]
arthurofbabylon 8y ago
I live in a town that's a haven for hiding illicit funds in luxury homes (cryptocurrency fraud). There is a vacancy rate of about 5% - housing costs are up greater than 5% as the vacant homes' impact has a compounding effect. I bring this up because it highlights an underlying trend shared between the article and my anecdote: fraud conducted in supply/demand markets hurts buyers and generally legal participants. Even if your deal is 100% legal and proper, the supply/demand dynamics have been altered by those committing the fraud and you're getting screwed.
- solotronics 8y ago
  Interesting, what exactly constitutes cryptocurrency fraud?
  - walrus01 8y ago
    a lot of things: ICO exit scams, pump and dump, etc.
- gt2 8y ago
  Which town?
  - dsl 8y ago
    San Francisco
    - deleted 8y ago
      [deleted]
- jimrandomh 8y ago
  A vacancy rate of 5% is not abnormally high. https://www.census.gov/housing/hvs/files/currenthvspress.pdf https://www.census.gov/housing/hvs/files/currenthvspress.pdf
  - ebikelaw 8y ago
jim-jim-jim 8y ago
Off topic, but can anybody explain why mobile scrolling is so weird on Outline articles? It's like there's way less friction when I swipe up and down. I have javascript completely turned off. Is there something else that governs this behavior? Because I want to block it too.
- agret 8y ago
  I dug into the source code and I believe it's caused by this: ui-path-scroll .post__article{-webkit-transition:height 1s;transition:height 1s} They set a transition length in the css so your browser is just obeying the style sheet. Doubt there is any way to override this without a browser extension.
rustcharm 8y ago
I disagree that millions of people "lost their homes" in the crash of 2008, as the author states in the introduction. Each word in that is not quite right. With a No Income, No Job, No Assets loan where the buyer was paying a teaser rate, or in some cases interest only (or less than interest only with negative amortization) the occupant was paying less than they would have had to pay in rent. When the property was foreclosed on, they often remained in the property for a year or more until there was a hearing. Nobody ever paid income tax on the imputed income from the free rent (the unpaid mortgage) during the foreclosure period. And when the loan was called in, nobody was ever made to pay income tax on the forgiven debt, even though the law requires that they do. The government didn't go after people because it would be an unpopular move. Most if not all of the people unable to pay their no-verification mortgages actually did quite well. They lived in a big house for a couple of years for less than the cost of rent. The people who lost were the foolish investors who invested in these terrible loans, the people whose pension funds invested in then, and most of all the True Taxpayers (those 5% of people who may more in taxes than they take in services and entitlements) who paid for all of this and are still paying.
ajdlinux 8y ago
After reading this, I'm glad to be living in a country which uses Torrens title.
- FuriouslyAdrift 8y ago
  A few states in the US use Torrens...
  - ajdlinux 8y ago
    And it's such an eminently sensible idea that I wonder why it's only a few.
valuearb 8y ago
The outline.com is almost a very readable site. But then I zoomed in slightly to make the text actually legible, and it fell apart. I could no longer scroll, and eventually some random ads appeared and blocked all access.
- e_proxus 8y ago
  Try outline.com instead: https://outline.com/jFDKt7 https://outline.com/jFDKt7 ;-) It even features keyboard scrolling (in Safari on macOS) which theoutline.com doesn't do.
rrcaptain 8y ago
We really should have locked up every single banker on Wall Street after 2007. The meme of private property has caused so much harm in the world. We have messes like this house sitting, rotting, festering, on society. We should excise the cancer of capitalism before it has fully matastisized and killed us all.
- solotronics 8y ago
  Replaced by what exactly? A free market is the natural way to allocate scarce resources. It is easy to say "allocate to those in need first" but who decides? Yes there are other possible systems but I don't think any of them have been remotely as sucessful overall as capitalism. There is a natural equilibrium found in a free market. Those who can produce cheaper and better quality make money.
  - rrcaptain 8y ago
    > A free market is the natural way to allocate scarce resources Capitalism didn't invent the market, trade predates agriculture. And there's hardly anything natural about a system where every individual is incentivized to screw over others. >It is easy to say "allocate to those in need first" but who decides There's _literally_ centuries of thought put into how to allocate resources outside of capitalism. I can't explain them in sufficient detail in a HN comments section, but you can start with the Conquest of Bread. >Yes there are other possible systems but I don't think any of them have been remotely as sucessful overall as capitalism. Success by what measure? And defined by who? Because capitalism's measures of "success" are often flawed and often more evident of its failings than its success. And if you're going off of metrics like life expectancy, Cuba has the USA (and many other capitalist countries) beat. And alternative systems have largely been successful, especially when you consider how actively capitalist forces sabotaged them. The USSR pre and post Stalin was extremely prosperous and the fall of the USSR has only left piles of human missery. Don't forget the US actively prevented the Communist Party from winning elections in former Soviet Bloc countries. >There is a natural equilibrium found in a free market. Those who can produce cheaper and better quality make money. Those who can produce profit make money. That is often not cheaper (when you account for externalities) or better quality.
intended 8y ago
This was worth the read. In stark contrast, one should walk into an econ forum, and see how people discuss the economy. Its about jobs, or labor figures, and compliance and regulation are things which just "work", or are to be avoided due to additional costs. I've come to the conclusion that 1) Economics is currently only as usfeul as the soundbite it generates 2) Economists are people with excellent working compasses, when people are looking for where they lost their keys
bumholio 8y ago
So he stayed for years in a below market house then received a nice wad of cash for the key. All courtesy of the US taxpayer who ended up on the hook for the massive Wall Street bankruptcies that made walking away from a $1 million dollar property a thing. It reads like he was quite ready to undercut Rosa and Adrian and take up payments with the original lender, only that he was unable to untangle the mess, and Adrian beat him to the punch by essentially forging some documents.
Zanni 8y ago
Apologies, but I can't let this go: "Adrian sold another property around this time, a big house in Flatbush with a driveway and a copula for $100,000 to another LLC." Pretty sure that house had a cupola[0], not a copula[1]. [0] https://en.wikipedia.org/wiki/Cupola https://en.wikipedia.org/wiki/Cupola [1] https://en.wikipedia.org/wiki/Copula https://en.wikipedia.org/wiki/Copula
- algorias 8y ago
  Maybe he backed a security with the house and sold that instead...
dzdt 8y ago
If you ever bought real estate in the U.S. you probably paid title insurance. This is insurance that covers the value of the loan in the case faulty or fradulent documents are found making the chain of ownership invalid. It costs like 1/2 of a percent of the property value. That is how YOU pay because of shenanigans like in this article.
- tantalor 8y ago
  Why don't we have a proof of custody (chain of ownership) instead of insurance against fraud? Wouldn't that be stronger & cheaper?
  - macintux 8y ago
    How do you prove the absence of some competing claim? Between tax and debt liens, fuzzy property boundaries, overlapping property addresses (there are two different pieces of property that use my address, only one of which I own) there are all sorts of weirdnesses that can result in uncertainty. (Disclaimer: not in real estate at all, so I'd imagine I'm just scraping the surface of oddities.)
    - fatbird 8y ago
      Among other things, this is what the common law principle of "Adverse Possession"[0] covers: The owner of a property has a minimal duty to enforce their claim on it, otherwise the claim is forfeited. If someone showed up at your house with documents that showed that a title transfer from a century ago was invalid and they were the rightful owner of your land, you could tell them to piss off just because they hadn't tried to enforce the claim previously. Without this principle, no ownership would ever be clear because there would always be the possibility that someone could show up later on and prove they're the real owner. It basically says that, after some point, the status quo rules. [0] https://en.wikipedia.org/wiki/Adverse_possession https://en.wikipedia.org/wiki/Adverse_possession
  - chrisabrams 8y ago
    I would suggest looking into buying a small piece of land on the edge of town and request a title search (get a list of previous owners). There you will see the mess that currently exists. We can create the most efficient process in the world with great technology, but it will take a long time before we can have confidence that all of the past records are recorded. If your title company fails to notice a deed from 1912... That's what the insurance is for. Even with the technology the insurance would still exist because it's silly not to buy the insurance. You are protected if the title company screws up with title insurance. In the future insurance would protect you from the "title chain" having bad data.
pjc50 8y ago
The UK is about to deploy a measure against this kind of thing: https://www.fladgate.com/2017/06/register-of-beneficial-ownership/ https://www.fladgate.com/2017/06/register-of-beneficial-owne... (Article says "UK" but the UK has two separate property law regimes and title registries, so they may not include Scotland)
- arethuza 8y ago
  The Scottish Government seems to be thinking about introducing a register of beneficial owners: https://www.gov.scot/Publications/2018/06/2736/355007 https://www.gov.scot/Publications/2018/06/2736/355007 Finding out who actually owns anything has been recognised by many people as being a problem for a while: http://www.andywightman.com/archives/category/who-owns-scotland http://www.andywightman.com/archives/category/who-owns-scotl... Scotland has very old and very weird landownership laws.
- tialaramex 8y ago
  This builds on the Persons with Significant Control rules for UK companies. In theory the rules for companies registered with Companies House require that they disclose human individuals who ultimately exercise significant control. For a public company there won't be anybody like that (individual shareholders aren't allowed to own enough of a public company to trigger "significant control"), but for private companies there's often just one or two real humans behind it, even if they own or control it via a trust fund with shares in an off-shore corporation that has special rights in a different off-shore corporation. In practice Persons with Significant Control is not adequately enforced. Lawyers routinely write in things that aren't people in the PSCs field (e.g foreign company names) for a company and there haven't been any negative consequences for that. I believe a willing government can and should enforce these rules by concluding that if, in fact, this company has assets but it's controlled by non-human entities, well then the government will seize its assets and add them to the treasury. No humans will be deprived of any assets by doing this so that's fine. When invariably an actual human squawks that their stuff is being taken we've found the actual Persons with Significant Control, they're welcome to pay some token fee, say, £100 000 for the wasted time and effort, and fix their records or we'll keep their stuff.
rwmj 8y ago
Are deeds in the US still physical documents? They used to be in the UK, but not for a few decades (they are now electronic records held by the Land Registry).
- radicalbyte 8y ago
  We have a similar system here in The Netherlands - the documents are stored electronically by the Land Registry (i.e. a semi-government organisation). From my discussions with people who work there I understand that our countries are a few decades ahead of most other countries, including those on the other side of the Atlantic.
- tialaramex 8y ago
  Yes, the US still uses physical deeds. The exact rules vary by state but as with lots of other things that are broken in the US, some people get very rich off this being broken and they're determined to keep it broken. Note that the UK has several registries, since it is very old and the registries cover the historical countries which make up the UK. "The Land Registry" is actually just a land registry for England and Wales, and dates back to 1862. For most of that history the situation has been that registration was entirely voluntary, but registrations trump other paperwork. So if you have a Land Registry entry which says you own this field, but I have a piece of paper that says I own it, tough, you own the field. These days most land will have been registered, transfers for money that aren't registered are now void in England, if you pay me $5M for the paper deed for a farm in Cornwall, but don't register in the process that's a waste of the $5M since I still own the farm afterwards. This ensures you pay the taxes ("stamp duty") owed on land purchases, if you don't pay you can't register, and if you don't register you don't actually own the land. [ Edited: Fixed unclear example ]
- mcherm 8y ago
  The US doesn't have deeds. Instead, there are 51 different state policies. And many of those states don't have a state-wide policy, but instead operate county-by-county. So SOME of those support electronic records while others don't.
  - 8y ago
rb808 8y ago
I love stuff like this, I always assumed everyone lived normal lives and played by the rules but there is so much that is the wild west still. In my friends building the largest penthouse's tenants were paying $6k/mo then the Chinese (mainland) owner disappeared - hasn't been seen for a few years now. Someone bought the tax lien so I guess they will get a huge condo for some token amount. (No mortgage)
dwighttk 8y ago
Author paid by the word, I guess
subpixel 8y ago
Help me understand, were the blank fields on the mortgage and the separated note a part of the fraud? Or just enabling factors?
aqme28 8y ago
Why is half of this article a summary of the Big Short?
- deleted 8y ago
  [deleted]
blastacon 8y ago
If ever there was a perfect moment for a TL;DR...
cannabisceo 8y ago
My take on this is that it has nothing to do with the housing market collapse of 2008. It smells of money laundering.

247 points by bhl 8y ago

Do people in general understand how incredibly rotten, rigged, and broken everything is? Imagine buying your dream house (a figurative one only coincidentally related to the article), turning the doorknob and it comes off in your hand. You flick the light switch but no lights, and it collapses into the panel. Touch the wall, and your finger pokes through. Completely broken, disintegrated, nested with termites and other creepy crawlers. The "inspectors" told you everything was fine. That is our world, and this life.

Waterluvian 8y ago
Your part of the world, maybe. But there's remedy to everything you described in most of the modern world.
- fatbird 8y ago
  Exactly. Notice how no one in the story has clean hands, even the reporter who knew that paying below market rent in cash without a lease meant that something funny was going on. It's not that hard to avoid shady business (though in fact, I laud the reporter, and maybe even Eddie and Rosa, for squeezing a bit of blood from a stone).

iaw 8y ago

Well this could be a fun data science project. How much real estate fraud can you find in ACRIS?

mikeyouse 8y ago
Fun story; when the financial disclosures came out for the new administration, I wrote a quick script to compare Trump's LLCs to property records in NYC's ACRIS and then looked over the results by hand to see outliers. It took literally 30 minutes of my time and I found the Trumps trying to evade like $500k in taxes. Eric Trump had used two anonymous LLCs to buy properties from his father's LLC for far below market rate. He was going to combine the units with another he already owned which actually made them more valuable than simple comps suggested. There were several opportunities to disclose the related party / family transaction but they both affirmed that it was at arm's length in the paperwork that they signed. Propublica & The WaPo both published articles but I wasn't sure at the time so I remained anonymous publicly. Turns out that corruption doesn't matter and nobody cares that our president constantly commits financial crimes, so meh? The propublica article: https://www.propublica.org/article/heres-how-trump-transferred-wealth-to-his-son-while-avoiding-usual-taxes https://www.propublica.org/article/heres-how-trump-transferr...
- intended 8y ago
  No, people care - but they are usually busy dealing with other news they are currently being overwhelmed by.
  - mikeyouse 8y ago
    It’s just amusing that if I had found something similar about the president 3 years ago instead of 1 year ago, it would’ve been front page news and would’ve likely resulted in impeachment hearings. Instead.. crickets and a couple lightly read articles. I always regarded moral relativism as a lens to judge modern culture against historical cultures and norms. It turns out that it’s much, much worse to be a ‘good’ person committing a moderately bad act as compared to a ‘bad’ person who regularly commits much worse acts. That’s a bit depressing. Edit to clarify my point: It was a major scandal when Tim Geithner had to pay $20k in back taxes that he owed from his time at the IMF, similarly when one of Clinton’s nominees for the AJ position withdrew when it turned out that she owed taxes on the salary she was paying her housekeeper, similarly again Spiro Agnew resigned from the office of the Vice President of the US over something like $8k in taxes on income he didn’t report (as well as some other corruption involving bribes and kickbacks). But millions of dollars of illegally shielded income depriving the treasury of hundreds of thousands of dollars in tax revenue during the campaign merits a shrug because there are so many other scandals.
    - deleted 8y ago
      [deleted]
    - lotsofpulp 8y ago
      Trump’s voter base would champion those actions, it’s not like it’s unknown that he’s a scumbag developer that takes every effort to cheat everyone he deals with. But the important thing is that they believe he’s on their team or one of their tribe, which allows him a lot of leeway in his behavior compared to someone on the other team or tribe, for whom even a minor indiscretion is unacceptable. Similar mechanisms are at work when a popular athlete is caught doing something, or priests, etc. Once someone’s ego becomes invested in you, you can more easily take advantage of them and that’s an important thing to learn (and wield for yourself).
_bxg1 8y ago
Assuming the documents are digitized, would probably be pretty easy to put together a neural network that pegs "interesting" documents for review. Not that it should be used as an authoritative judgement, but it sounds like so much stuff gets through the system just because there aren't enough eyes to check everything for the obvious markers.

8bitsrule 8y ago

A sad, amusing, enlightening article.

asdfasgasdgasdg 8y ago
I didn't find it all that sad. Some people got to live in a house paying below market rate for a long time. Some dude pulled one over on some dumb banks and managed to extract a lot of money from their shareholders. Some fraudulent documents got filed, but the victims of the fraud are the owners of those failed financial institutions. I guess, if any part of it is sad, that is, since ultimately that's people's pensions and retirement funds. But that's a kind of faceless and diffuse group of entities to really feel sorry for. I agree it was fascinating, though.
- arthurofbabylon 8y ago
  You're lacking in creativity. It shouldn't be too hard to put a face to the victims: take a look around you. This kind of disparate fraud impacts all of the non-beneficiaries. That includes me, you, your aunt and uncle, etc. etc.
  - asdfasgasdgasdg 8y ago
    In fact, I pointed out the exact effect you mentioned: that this fraud caused diffuse losses. It's well documented that most humans have trouble feeling empathy in the face of statistical harms, so in that sense I'm just a normal person. It has nothing to do with creativity or understanding. I am comfortable with my emotional stance on this article. Also worth noting that, broadly speaking, the same general class of folks harmed by this practice were also helped by other "bank errors" in their favor. (By that, I mean the wealthy. People who can afford to be shareholders in banks.) So it's doubly hard to feel bad, since, by and large, the wealthy have never been doing better.
    - arthurofbabylon 8y ago
      You're "normally" devoid of creativity? Your second paragraph: you relate "general class of folks harmed by this practice" (ie everyone) with "the wealthy" ...? Can you explain that, I'm a bit confused.

rblatz 8y ago

You’d think after 10 years they could claim the property through adverse possession and clear up any “cloud” over the ownership.

toast0 8y ago
Adverse possession wouldn't wipe out a properly recorded lein. Of course, it doesn't seem that the lein was properly recorded. You could maybe sue the leinholder to provide proper documentation or abandon the lein, but you run the risk of the leinholder finding enough documentation to convince a judge, and making the lein valid and enforceable, instead of vaguely maybe not an issue. Or, maybe you just pay someone to "find" the documents, and hope the leinholder doesn't notice or doesn't care. This case seems murky enough that even a potential recovery of $1M might not be worth it for the leinholder.
CPLX 8y ago
Adverse possession is extremely misunderstood. It almost never applies to landlord/tenant type situations. The reason being that that posession is not “adverse” in the sense that the person was living there with permission in exchange for rent. Adverse possession, generally, comes into play with property line disputes, and sometimes with genuine long term squatter situations. A core and often overlooked element however is that a license or permission to use the property means you aren’t possessing it “adversely”.
logfromblammo 8y ago
Some states allow a civil suit against all known creditors, lien-holders, or anyone else that may have an interest in the property, forcing them to show proof of their interest, then the judge makes a declarative judgment stating who owns the property, and the obligations the owner may have to the other parties. Statutes enabling such suits are custom-tailored for removing clouds. If the lenders don't have their paperwork in order, the judge can sever the mortgage from the note, turning it into an unsecured debt.
- deleted 8y ago
  [deleted]

arthurofbabylon 8y ago

I live in a town that's a haven for hiding illicit funds in luxury homes (cryptocurrency fraud). There is a vacancy rate of about 5% - housing costs are up greater than 5% as the vacant homes' impact has a compounding effect. I bring this up because it highlights an underlying trend shared between the article and my anecdote: fraud conducted in supply/demand markets hurts buyers and generally legal participants. Even if your deal is 100% legal and proper, the supply/demand dynamics have been altered by those committing the fraud and you're getting screwed.

solotronics 8y ago
Interesting, what exactly constitutes cryptocurrency fraud?
- walrus01 8y ago
  a lot of things: ICO exit scams, pump and dump, etc.
gt2 8y ago
Which town?
- dsl 8y ago
  San Francisco
  - deleted 8y ago
    [deleted]
jimrandomh 8y ago
A vacancy rate of 5% is not abnormally high. https://www.census.gov/housing/hvs/files/currenthvspress.pdf https://www.census.gov/housing/hvs/files/currenthvspress.pdf
- ebikelaw 8y ago

jim-jim-jim 8y ago

Off topic, but can anybody explain why mobile scrolling is so weird on Outline articles? It's like there's way less friction when I swipe up and down. I have javascript completely turned off. Is there something else that governs this behavior? Because I want to block it too.

agret 8y ago
I dug into the source code and I believe it's caused by this: ui-path-scroll .post__article{-webkit-transition:height 1s;transition:height 1s} They set a transition length in the css so your browser is just obeying the style sheet. Doubt there is any way to override this without a browser extension.

rustcharm 8y ago

I disagree that millions of people "lost their homes" in the crash of 2008, as the author states in the introduction. Each word in that is not quite right. With a No Income, No Job, No Assets loan where the buyer was paying a teaser rate, or in some cases interest only (or less than interest only with negative amortization) the occupant was paying less than they would have had to pay in rent. When the property was foreclosed on, they often remained in the property for a year or more until there was a hearing. Nobody ever paid income tax on the imputed income from the free rent (the unpaid mortgage) during the foreclosure period. And when the loan was called in, nobody was ever made to pay income tax on the forgiven debt, even though the law requires that they do. The government didn't go after people because it would be an unpopular move. Most if not all of the people unable to pay their no-verification mortgages actually did quite well. They lived in a big house for a couple of years for less than the cost of rent. The people who lost were the foolish investors who invested in these terrible loans, the people whose pension funds invested in then, and most of all the True Taxpayers (those 5% of people who may more in taxes than they take in services and entitlements) who paid for all of this and are still paying.

ajdlinux 8y ago

After reading this, I'm glad to be living in a country which uses Torrens title.

FuriouslyAdrift 8y ago
A few states in the US use Torrens...
- ajdlinux 8y ago
  And it's such an eminently sensible idea that I wonder why it's only a few.

valuearb 8y ago

The outline.com is almost a very readable site. But then I zoomed in slightly to make the text actually legible, and it fell apart. I could no longer scroll, and eventually some random ads appeared and blocked all access.

e_proxus 8y ago
Try outline.com instead: https://outline.com/jFDKt7 https://outline.com/jFDKt7 ;-) It even features keyboard scrolling (in Safari on macOS) which theoutline.com doesn't do.

rrcaptain 8y ago

We really should have locked up every single banker on Wall Street after 2007. The meme of private property has caused so much harm in the world. We have messes like this house sitting, rotting, festering, on society. We should excise the cancer of capitalism before it has fully matastisized and killed us all.

solotronics 8y ago
Replaced by what exactly? A free market is the natural way to allocate scarce resources. It is easy to say "allocate to those in need first" but who decides? Yes there are other possible systems but I don't think any of them have been remotely as sucessful overall as capitalism. There is a natural equilibrium found in a free market. Those who can produce cheaper and better quality make money.
- rrcaptain 8y ago
  > A free market is the natural way to allocate scarce resources Capitalism didn't invent the market, trade predates agriculture. And there's hardly anything natural about a system where every individual is incentivized to screw over others. >It is easy to say "allocate to those in need first" but who decides There's _literally_ centuries of thought put into how to allocate resources outside of capitalism. I can't explain them in sufficient detail in a HN comments section, but you can start with the Conquest of Bread. >Yes there are other possible systems but I don't think any of them have been remotely as sucessful overall as capitalism. Success by what measure? And defined by who? Because capitalism's measures of "success" are often flawed and often more evident of its failings than its success. And if you're going off of metrics like life expectancy, Cuba has the USA (and many other capitalist countries) beat. And alternative systems have largely been successful, especially when you consider how actively capitalist forces sabotaged them. The USSR pre and post Stalin was extremely prosperous and the fall of the USSR has only left piles of human missery. Don't forget the US actively prevented the Communist Party from winning elections in former Soviet Bloc countries. >There is a natural equilibrium found in a free market. Those who can produce cheaper and better quality make money. Those who can produce profit make money. That is often not cheaper (when you account for externalities) or better quality.

intended 8y ago

This was worth the read. In stark contrast, one should walk into an econ forum, and see how people discuss the economy. Its about jobs, or labor figures, and compliance and regulation are things which just "work", or are to be avoided due to additional costs. I've come to the conclusion that 1) Economics is currently only as usfeul as the soundbite it generates 2) Economists are people with excellent working compasses, when people are looking for where they lost their keys

bumholio 8y ago

So he stayed for years in a below market house then received a nice wad of cash for the key. All courtesy of the US taxpayer who ended up on the hook for the massive Wall Street bankruptcies that made walking away from a $1 million dollar property a thing. It reads like he was quite ready to undercut Rosa and Adrian and take up payments with the original lender, only that he was unable to untangle the mess, and Adrian beat him to the punch by essentially forging some documents.

Zanni 8y ago

Apologies, but I can't let this go: "Adrian sold another property around this time, a big house in Flatbush with a driveway and a copula for $100,000 to another LLC." Pretty sure that house had a cupola[0], not a copula[1]. [0] https://en.wikipedia.org/wiki/Cupola https://en.wikipedia.org/wiki/Cupola [1] https://en.wikipedia.org/wiki/Copula https://en.wikipedia.org/wiki/Copula

algorias 8y ago
Maybe he backed a security with the house and sold that instead...

dzdt 8y ago

If you ever bought real estate in the U.S. you probably paid title insurance. This is insurance that covers the value of the loan in the case faulty or fradulent documents are found making the chain of ownership invalid. It costs like 1/2 of a percent of the property value. That is how YOU pay because of shenanigans like in this article.

tantalor 8y ago
Why don't we have a proof of custody (chain of ownership) instead of insurance against fraud? Wouldn't that be stronger & cheaper?
- macintux 8y ago
  How do you prove the absence of some competing claim? Between tax and debt liens, fuzzy property boundaries, overlapping property addresses (there are two different pieces of property that use my address, only one of which I own) there are all sorts of weirdnesses that can result in uncertainty. (Disclaimer: not in real estate at all, so I'd imagine I'm just scraping the surface of oddities.)
  - fatbird 8y ago
    Among other things, this is what the common law principle of "Adverse Possession"[0] covers: The owner of a property has a minimal duty to enforce their claim on it, otherwise the claim is forfeited. If someone showed up at your house with documents that showed that a title transfer from a century ago was invalid and they were the rightful owner of your land, you could tell them to piss off just because they hadn't tried to enforce the claim previously. Without this principle, no ownership would ever be clear because there would always be the possibility that someone could show up later on and prove they're the real owner. It basically says that, after some point, the status quo rules. [0] https://en.wikipedia.org/wiki/Adverse_possession https://en.wikipedia.org/wiki/Adverse_possession
- chrisabrams 8y ago
  I would suggest looking into buying a small piece of land on the edge of town and request a title search (get a list of previous owners). There you will see the mess that currently exists. We can create the most efficient process in the world with great technology, but it will take a long time before we can have confidence that all of the past records are recorded. If your title company fails to notice a deed from 1912... That's what the insurance is for. Even with the technology the insurance would still exist because it's silly not to buy the insurance. You are protected if the title company screws up with title insurance. In the future insurance would protect you from the "title chain" having bad data.

pjc50 8y ago

The UK is about to deploy a measure against this kind of thing: https://www.fladgate.com/2017/06/register-of-beneficial-ownership/ https://www.fladgate.com/2017/06/register-of-beneficial-owne... (Article says "UK" but the UK has two separate property law regimes and title registries, so they may not include Scotland)

arethuza 8y ago
The Scottish Government seems to be thinking about introducing a register of beneficial owners: https://www.gov.scot/Publications/2018/06/2736/355007 https://www.gov.scot/Publications/2018/06/2736/355007 Finding out who actually owns anything has been recognised by many people as being a problem for a while: http://www.andywightman.com/archives/category/who-owns-scotland http://www.andywightman.com/archives/category/who-owns-scotl... Scotland has very old and very weird landownership laws.
tialaramex 8y ago
This builds on the Persons with Significant Control rules for UK companies. In theory the rules for companies registered with Companies House require that they disclose human individuals who ultimately exercise significant control. For a public company there won't be anybody like that (individual shareholders aren't allowed to own enough of a public company to trigger "significant control"), but for private companies there's often just one or two real humans behind it, even if they own or control it via a trust fund with shares in an off-shore corporation that has special rights in a different off-shore corporation. In practice Persons with Significant Control is not adequately enforced. Lawyers routinely write in things that aren't people in the PSCs field (e.g foreign company names) for a company and there haven't been any negative consequences for that. I believe a willing government can and should enforce these rules by concluding that if, in fact, this company has assets but it's controlled by non-human entities, well then the government will seize its assets and add them to the treasury. No humans will be deprived of any assets by doing this so that's fine. When invariably an actual human squawks that their stuff is being taken we've found the actual Persons with Significant Control, they're welcome to pay some token fee, say, £100 000 for the wasted time and effort, and fix their records or we'll keep their stuff.

rwmj 8y ago

Are deeds in the US still physical documents? They used to be in the UK, but not for a few decades (they are now electronic records held by the Land Registry).

radicalbyte 8y ago
We have a similar system here in The Netherlands - the documents are stored electronically by the Land Registry (i.e. a semi-government organisation). From my discussions with people who work there I understand that our countries are a few decades ahead of most other countries, including those on the other side of the Atlantic.
tialaramex 8y ago
Yes, the US still uses physical deeds. The exact rules vary by state but as with lots of other things that are broken in the US, some people get very rich off this being broken and they're determined to keep it broken. Note that the UK has several registries, since it is very old and the registries cover the historical countries which make up the UK. "The Land Registry" is actually just a land registry for England and Wales, and dates back to 1862. For most of that history the situation has been that registration was entirely voluntary, but registrations trump other paperwork. So if you have a Land Registry entry which says you own this field, but I have a piece of paper that says I own it, tough, you own the field. These days most land will have been registered, transfers for money that aren't registered are now void in England, if you pay me $5M for the paper deed for a farm in Cornwall, but don't register in the process that's a waste of the $5M since I still own the farm afterwards. This ensures you pay the taxes ("stamp duty") owed on land purchases, if you don't pay you can't register, and if you don't register you don't actually own the land. [ Edited: Fixed unclear example ]
mcherm 8y ago
The US doesn't have deeds. Instead, there are 51 different state policies. And many of those states don't have a state-wide policy, but instead operate county-by-county. So SOME of those support electronic records while others don't.
- 8y ago

rb808 8y ago

I love stuff like this, I always assumed everyone lived normal lives and played by the rules but there is so much that is the wild west still. In my friends building the largest penthouse's tenants were paying $6k/mo then the Chinese (mainland) owner disappeared - hasn't been seen for a few years now. Someone bought the tax lien so I guess they will get a huge condo for some token amount. (No mortgage)

dwighttk 8y ago

Author paid by the word, I guess

subpixel 8y ago

Help me understand, were the blank fields on the mortgage and the separated note a part of the fraud? Or just enabling factors?

aqme28 8y ago

Why is half of this article a summary of the Big Short?

deleted 8y ago
[deleted]

blastacon 8y ago

If ever there was a perfect moment for a TL;DR...

cannabisceo 8y ago

My take on this is that it has nothing to do with the housing market collapse of 2008. It smells of money laundering.