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Unscrupulous real estate speculators — beware
By J. Patrick Eaken
Press Staff Writer
news@presspublications.com
Toledo officials say a new law regarding land contract sales will help “protect Toledo homeowners and take steps to improve Toledo’s housing stock.”
In August 2006, Mayor Carty Finkbeiner created the Toledo Housing Task Force and asked it to develop a comprehensive policy to improve the city’s aging housing stock.
The task force recommended a new law requiring any home sold under land contract be inspected by a private inspector to assure it meets minimum city codes and standards of habitability.
“Our goal is to protect prospective home buyers from unscrupulous real estate speculators who sell homes on land contract,” Finkbeiner said. “ Toledo recently felt the sting of just such a speculator. While I’ll not make any statements about the guilt or innocence of the principles, it is not in dispute that the Westhaven Group took advantage of a lot of people.
John Ulmer founded the Westhaven Group, once the largest residential property owner in Lucas County. Ulmer and his son, Scot, were indicted in April on 81 counts related to securities fraud and racketeering for defrauding investors.
“Often, homes sold on land contract are sold with major structural and infrastructure defects. Owners can’t afford the repairs and can’t afford to pay installments on a home they cannot live in. The seller gets the home back, keeps the owner’s payments, and resells the property to another unsuspecting buyer.”
Finkbeiner said the law protects prospective buyers “who lack the expertise or ability to detect code violations or structural flaws in homes. It improves the housing stock by assuring that real estate speculators who sell by land contract make necessary repairs to these homes prior to putting them on the market.”
“It’s a very bad situation when unscrupulous people take advantage of other people and Westhaven is a good example of that,” Councilman Joe McNamara added. “Our neighborhoods belong to all of us. It’s been said over and over again, our city is made up of not one city, but of neighborhoods.”
One housing task member said the Westhaven Group is only one example, but it is one of the largest companies that offer land contracts.
“It is a loophole that they jumped through with both feet, so this really closes the gap of that loophole,” the committee member said. “It allows people to see what needs to be done so they can make a decision to determine if they really want to buy that house.”
“There can be no more Westhavens in Toledo,” Mayor Finkbeiner exclaimed. “The economy has been bruising, and there is one thing we can do and that is helping our existing housing stock stay as healthy as we can.”
Toledo sets precedent
Finkbeiner announced the legislation on Monday, and the following day council voted to make the legislation law.
The law requires that once a 20-benchmark inspection is complete, a certificate is issued that accompanies the sale, said Chris Zervos, acting commissioner for the Division of Building Inspection. The certificate is good for three years and is issued to the property, so it is transferable.
Zervos said the property owner bears the cost of the inspection, but added the cost can be negotiable between the buyer and seller.
The city is making arrangements to notify listed inspectors. Zervos said some inspectors are already certified, but have not been notified about the new law.
A member of the Greater Toledo Housing Commission said the task force has been working to create this legislation “for longer than I have been involved with the GTHC.”
Mayor Finkbeiner expected the Toledo law to set a precedent.
“State legislatures, as of today, should have the same desire to impact housing for those citizens who are involved but do not always have the tools available to make a wise, intelligent choice,” the mayor said. “If you can remember back to when you bought your first house — I know I could’ve made a better decision.”
Opponents of the law say that it will add more costs to the seller in an already downtrodden real estate market.
McNamara called reference to inspection costs “a political question,” and said council heard testimony from homeowners who bought into land contracts before making a decision.
“We’re talking about some serious, serious abuses on houses sold on land contracts and it has to stop, and this legislation will make it stop,” McNamara said.
“You see a lot of news about the Ulmer situation, who is going to jail because of this situation. But you didn’t see the people who have given up their life savings to purchase their home,” a committee member said. “We have taken a comprehensive look so that this can be done, and we are confident.”
Finkbeiner added, “You have had news stories on this for some time. If we did not do anything, what would you think of us keeping the door wide open for another series of people to be victimized?”
“This task force, ladies and gentlemen, has seen a lifetime in the housing industry. They’ve seen the good, they’ve seen the bad, and they’ve seen the ugly. Home ownership is the single greatest feature to America’s free-enterprise system,” the mayor said.
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