HOA (Mostly Vacant Lots) Nightmare

Guess U could say I'm an HOA volunteer (I was on a couple of the Boards) . . . I'm the one losing the most money so I'm the one doing most of the research.

Over 10-years-ago I bought a bunch of vacant lots (about 50, via tax lien foreclosure) in a bankrupt subdivision (went bankrupt in the late 60's).

None of the lots were completed by the developers, i.e., no sewers, streets, utilities. There were HOA-papers filed in the 60's but the HOA was inactive . . . a few people built homes on the lots.

There were about 1500 other lots in this subdivision that were owned by two or three entities, who were delinquent in taxes. Some "crooks" bought up all the tax liens, foreclosed and formed a new HOA, by amending the CC&Rs. They sucked us private lot-owners into their HOA, began developing the lots and charged us for the development, using an HOA-management company as collection/billing agent for the "assessments."

I thought it all sounded fair . . . I sold three of my lots to the crooks and made a big profit.

When they moved to TWO new "phases" developing lots in two sections, it took them waaay too long to finish; the sewers in the first section have not been approved by the County. (They moved on to a new section without finishing the first.)

At one of the HOA meetings, a big-shot developer for a major home-builder told us that the governors of our HOA should be in jail. He said they waay overcharged us, hired incompetent ppl to do the work, took too long to do the work. He said his home-builder company sued the crooks and won a big settlement.

All this time I just thought, well, we made a bad choice and the economy went bad.

The bank foreclosed on the crooks and got ownership to the majority of lots (so whatever the majority owners say, they do), it was the bank's biggest loss in history, $31-Million.

I'm stuck with HOA liens on all of my 50 lots. Some of the lots have not had any dirt moved . . . $10,000 lien for "studies," etc..

Many other private lot owners are also mad. The liens are worth more than the lots. The HOA "sold" the liens to private investors. Most of the investors seem to be affiliated with the crooks. I'm not sure any of them put up any $$$ for the liens.

The bank sold their interest in their lots, free & clear of any liens, to a new bunch of shady ppl -- a bunch of prominent lawyers in town.

I spoke to several lawyers, they all want lotsa money or claim conflict of interest, having known the crooks or whatever. I spoke to the County Attorney who was sued by the crooks when they tried to suck us in to the HOA and wouldn't let them . . . we lost in court.

We're totally screwed. The new HOA is charging us quarterly dues on our vacant lots for nothing.

I had an oral agreement that they could not foreclose the liens until the work was finished.

I told the new majority owners, we should disband the HOA. The spokeperson for the Majority owners said if we disbanded the HOA, the lien-holders will foreclose. I say, "let them foreclose," we'll fight.

What should we do?! None of us have the $100,000 the lawyers want to fight for us. I'm thinking of going to the FBI. Local sheriff, fraud investigator said this sounds like a "civil" matter.

Thx!

It may be too late to appeal. I spoke to the County Attorney about it.

I reinvested the profits, paying off the assessments on two lots where the sewers are not approved. Lawyer would not take interest (ownership) in any of my lots due to "conflict of interest" and said it would be "unethical."

One of the "crooks" attempted to assault me at one of the HOA meetings when I accused him of flipping the lots among his shell companies to boost the assessed value, probably so they could get a bank loan.

I spoke to a VP of the bank. They did not want to do a forensic examination of the books. I suspect that the bank overseeer was involved in kickbacks . . . this is how developers in China do business.

As far as "class action," none of us have any $$$. Some of the other injured parties have a different take on the situation in that they were never informed that the HOA could sell the assessments. Only if U went to the meetings would U have known about the HOA selling the assessments to others. I never thought they would find investors. Like I said, most of the investors were friends/associates of the crooks.

Sorry, I can't think of a better word to describe the ppl who sucked us into the HOA.

Raquel,

It sounds like you are between a rock and a hard place. From your point of view I can understand your frustrations but sometimes when you are in a place where everyone else but me is wrong it is just better to step away. It appears you are too emotionally involved to act judicially. Your suggestion about contacting the FBI makes no sense. Sorry and good luck.

Why don't you report this to the state? I would think this is a state problem and not a county problem.

Raquel,

Just to make thing clear, although you're name shows you're from AZ, the HOA you're talking about is actually located in Las Vegas, NV, right?

BTW, there's nothing wrong with having some vacant lots in an HOA, in fact all HOAs started out with vacant lots! At some point in time a home will be built on those vacant lots. The fact that the lot is vacant doesn't make the deed restrictions less enforceable or less valid.

Raquel,

Sorry I took a look at the article on the website you posted the URL for. I mistakenly thought it was about your HOA.

You may want to ask your attorney if these "crimes" being committed by the developers of your HOA could fall under RICO. Below is an interesting do explaining RICO.

From the "rico.com" website:

In 1970, Congress passed the Racketeer Influenced and Corrupt Organizations (RICO) Act, Title 18, United States Code, Sections 1961-1968. At the time, Congress' goal was to eliminate the ill-affects of organized crime on the nation's economy. To put it bluntly, RICO was intended to destroy the Mafia.

Throughout the 1970's, RICO's intended purpose and its actual use ran parallel to each other. Seldom was RICO used outside of the context of the Mafia, and it is not an overstatement to say that civil claims under RICO were simply not brought.

In the 1980's, however, civil lawyers noticed section 1964(c) of the RICO Act, which allows civil claims to be brought by any person injured in their business or property by reason of a RICO violation. Any person who succeeded in establishing a civil RICO claim would automatically receive judgment in the amount of three times their actual damages and would be awarded their costs and attorneys' fees. The financial windfall available under RICO inspired the creativity of lawyers across the nation, and by the late 1980's, RICO was a (if not the most) commonly asserted claim in federal court. Everyone was trying to depict civil claims, such as common law fraud, product defect, and breach of contract as criminal wrongdoing, which would in turn enable the filing of a civil RICO action.

RICO's broad application was the result of Congress' inclusion of mail and wire fraud as two crimes upon which a RICO claim could be brought. Given the breadth of activities that had historically been criminally prosecuted under the mail and wire fraud statutes, it was not difficult for creative civil attorneys to depict practically any wrongdoing as mail or wire fraud.

During the 1990's, the federal courts, guided by the United States Supreme Court, engaged in a concerted effort to limit the scope of RICO in the civil context. As a result of this effort, civil litigants must jump many hurdles and avoid many pitfalls before they can expect the financial windfall available under RICO, and RICO has become one of the most complicated and unpredictable areas of the law.

Today, RICO is almost never applied to the Mafia. Instead, it is applied to individuals, businesses, political protest groups, and terrorist organizations. In short, a RICO claim can arise in almost any context.

The purpose of this website is to simplify this very complicated area of the law and to articulate and make more predictable the legal standards that govern such claims.

Robert, the big-shot developer I sent that message to said these ppl should be in jail for what they did! The developer was involved in a civil lawsuit for a National home builder and was not supposed to breech confidentiality . . . the crooks threatened him & his mother for telling us thin info. All the lawyers I spoke to, including two police investigators and the County Attorney said "confidentiality in a civil lawsuit may be breeched if fraud is involved." (It's been over five hours since I sent that email . . . no word yet.)

Yes, I'm familiar with the RICO statute and told the County Fraud Investigator this is a RICO action.

I asked the County Attorney why we lost and she was as bewildered as I.

At first I was opposed to what these ppl were doing but then they promised to buy our lots (after they were completed) for a good profit . . . kinda like a Ponzi-scheme. At the time of the Court Hearing, I wasn't opposed . . . probably the biggest mistake I made!

I can't continue to pay all the property taxes on these lots. It's stupid to pay the taxes with the liens on them . . . it's not right to not pay Ur property taxes . . . I just don't know what to do!

This is an OLD post from 2009. Best to start a new topic. Thank you.

hmmmmm ...... let me see if i understand:

+ you speculate in real estate

+ you 'snatched up' 50 lots cheap

+ "...I sold three of my lots to the crooks and made a big profit."

+ someone else made similar transactions

+ you lost $$

Pray tell; what, exactly, is your complaint?

CAVEAT EMPTOR

John,

Thank you for that link. Now I understand exactly what the case was about.

Larry,

Thanks.

Raquel,

Since the case isn't relevant to this thread (based on Larry's post) it is best not to reactivate an old thread. This is because laws change and what may have been good advice in the past can be bad advice now. With an old thread, this can cause confusion for readers. Hence it's best to start a new thread.

Tim

Raquel,

I looked at the website. It appears that the lawsuit you spoke of involving your lots arose because the majority owners presented a development plan to Pima County through the HOA. The county planning director asserted that the HOA had no authority to act on behalf of the owners, a lawsuit over the issue ensued, and the county lost.

Raquel,

Thanks for putting that 1964 ad on your blog. New homes for $12,500. Just $375 down and $80 per month.

I went to the U of A in Tucson in 1966-67. (My one year there was documented in Animal House. I was the nerdy fat kid who got corrupted by all the drunks he hung around with.)

Later on, I lived near I-10 and Kolb in for a little over 3 years beginning in late 2002 and I am familiar with the area around "New Tucson" and "Corona de Tucson."

Tucson was a much smaller place in the 1960's and "New Tucson" was a long ways out of town. When I lived there in 1966, no one lived east of Wilmot Road; it was the end of civilization. I-10 did not yet exist so all travel would have been on Benson Highway, which was not a terribly friendly way to go once one left the east side of Tucson. It is easy to see why New Tucson failed.

One long-standing impediment to development on the southeast side of Tucson is that the state owns huge tracts of land that it sells only grudgingly. There is a wall of state land that halts development on the SE side of Tucson and that wall extends for miles to the east, forcing development far out of town.