October 18, 2019
Fraud Highlights Flaws in Foreclosure and Blight Practices
The investment in foreclosed properties can be a lucrative and legitimate way to make some extra money if one has the proper knowledge and scruples. Unfortunately, at present there are flaws in the system that some exploit for their own enrichment, to the detriment of others in the line of property-ownership and to communities surrounding the properties that get subjected to blight by their proximity.
In April, The Buffalo News reported on an international ponzi scheme in which the owner of a Kuwaiti company put the company and himself forward to other Kuwaitis as reputable brokers of housing properties in the United States, which were sold to potential investors in the oil-rich nation as “investment properties.” But often the properties being sold were not in fact as they were represented—many were foreclosures bought at auction and never “flipped” in the common understanding of the term. Often they were dilapidated already, standing vacant, and wholly unmaintained. Sometimes the company actually sold properties that it had already sold to someone else previously, or even that it did not in fact own itself. But even the homes legitimately sold that were not in bad shape when the company sold them were left without care and maintenance, which caused them to deteriorate rapidly. This resulted in blight for the neighborhoods in which these properties were found—which were located in various areas of the country, including in our service area of Florida, though the highest concentration appears to have been in Buffalo, New York.
Interestingly, this schemer was arrested and charged in Kuwait, where the property purchasers were defrauded. But the larger losses may have come in the communities where the blight occurred—though the costs are more diffuse in such a situation, coming in the form of lowered property values, increased crime, increased pest activity, and other such guises.
Luckily, some communities are putting in place new measures to handle the risks posed by foreclosure and blight.
Whether you’re looking to buy investment properties in Westchester, Massachusetts; West Palm, Florida; or Newport, Rhode Island, you’ll need to make sure your new home is not threatened by defects in your ownership of title, to be certain no schemes are afoot. At Topouzis & Associates, P.C., we delve deeply into the history of your properties—including foreclosures—in order to ensure that your property ownership will not be hindered by past issues; and we provide the Title Insurance to back our assessments. Contact us to ensure that you are covered in case of surprise.