Furniture allotment?

[B Rock]

What is the name of your state? SC

This is a 2-parter. My brother-in-law and I purchased a rental property in a "hot" beach area this spring. We only made 20% of the rental income that the agent and the rental company told us we would make and now I want out. The developer, real estate agent, mortgage broker, RE lawyer, and appraiser all worked together. At first, I thought I had done the right thing by utilizing a team of local experts (at least that's what all the real estate books tell you). We negotiated the condo at $630K but they offered to sell it to me for the appraised value of $750K, giving me back the difference after closing. They assured me that it was perfectly legal and they do it all the time. They said has nothing to do w/ the mortgage company because the appraisal (which they obtained) and the mortgage was the same. A real estate agent I'm speaking with about selling the property said that what they did was illegal and that this whole thing "stinks" and told me to get a lawyer. So, did this "team" take advantage of us by selling us a market that was 2 years old and because they were trusted we relied on thier depiction of the environment? Every person on this deal was part of it. From the person who appraised the condo to the mortgage broker who got us a loan. Did we break the law? Am I in big trouble here because these people told me point blank that this was touchy, but legal? Is there any re-course for the dishonest way they sold this to us?

[seniorjudge]

Q: Did we break the law?

A: Based solely on the facts you posted, it sounds like you committed major fraud.





We negotiated the condo at $630K but they offered to sell it to me for the appraised value of $750K, giving me back the difference after closing. They assured me that it was perfectly legal and they do it all the time.

How could you possibly think this was legal?

[nextwife]

If there is NO lender at all, then I'm uncertain it is illegal. A cash buyer can pay anything they want, and are free to overpay, etc.

However, IF any financing is involved, ya'll were ONLY legal on this if all the cash backs and credits were fully disclosed in the HUD and the lender was fine with the deal. Betcha that wasn't how it was done, huh?

[B Rock]

Actually, when we were closing (I did it out of state) the copy of the document that detailed the allotment was in the paperwork. Was the "furniture allotment" complete BS?
Could the lawyer be in on this as well? Could he have just ignored it?

How should I go about getting representation? I feel like I was duped, tricked, taken advantage of, etc...I'm thinking of trying to blow the whistle on this. Is that wise or should I keep my mouth shut and wait and see what happens? I asked the lender, the real estate broker, the builder...all said this was legal. I feel terrible and I want to make it right but I don't know if I can without going to jail! Has anyone ever heard of this kind of scam?

[nextwife]

Originally Posted by B Rock

Actually, when we were closing (I did it out of state) the copy of the document that detailed the allotment was in the paperwork. Was the "furniture allotment" complete BS?
Could the lawyer be in on this as well? Could he have just ignored it?

How should I go about getting representation? I feel like I was duped, tricked, taken advantage of, etc...I'm thinking of trying to blow the whistle on this. Is that wise or should I keep my mouth shut and wait and see what happens? I asked the lender, the real estate broker, the builder...all said this was legal. I feel terrible and I want to make it right but I don't know if I can without going to jail! Has anyone ever heard of this kind of scam?

Was it clearly shown on the HUD? What "paperwork" are you referring to?

[B Rock]

I just checked the HUD. On line 1305 it lists the disbursement from seller to buyer. Then, it directs to additional exhibits. Next page is an addendum listing the payment of services to the real estate agent and the allotment to me. It's listed again on a 2nd exhibit. Lastly, it's all signed off by my lawyer. All the numbers are there, who gets what etc...

So, even if my lawyer reviews everything, signs off and gives me the thumbs up, if it was still illegal, how could I have possibly have known? Isn't that what I paid him for? To make sure that everything was legal and correct?

[moburkes]

It sounds like the only thing that went wrong was that you didn't do your research on the market to see if the rents you expected to get were the rents you were going to get. So, since you made a bad decision to buy a unit with the expectation that the rents were 5X more than they actually were, you are now trying to find any way possible to "reverse" the loan.

[B Rock]

That's how it started. Myself and another couple that worked with the team are getting killed and we were comparing notes on how and what we were told. When looking at our situation, other realtors pointed out some shady things by the "team". According to the realtors, how they portray the market, what they say etc...matter. They tell me to report them to the BBB and Realtor associations etc...These guys have all but disappeared from the area.

I'm still going to consult w/ an attorney.

[nextwife]

Sell your homes and move into your overpriced rentals?

[HomeGuru]

hahaha, another scam.

[B Rock]

nextwife: Can't move into the condo. But, I can just try my best to get the rents up for next year. I spoke to a lawyer today and he said that I couldn't have done anymore to make sure everything was legal other than taking the agreement to a judge or go to law school myself. Thanks for the idea to double check the HUD and agreement. You're the only one that helped.

Moburkes: I don't want to "reverse" the mortgage. That's ridiculous. I want to know if what they did was allowed or illegal so either I or someone else doesn't get scammed again. Novel idea for you? I'm not trying to "get out" of anything. I'm trying to ...wait for it...LEARN and possibly protect myself.

HomeGuru: You think it's funny that people get scammed? Wait until it happens to you and everyone laughs at your hardship. Is it funny if someone steals your identity and you have to pay the consequences? Loser.

[moburkes]

Originally Posted by B Rock

Moburkes: I don't want to "reverse" the mortgage. That's ridiculous. I want to know if what they did was allowed or illegal so either I or someone else doesn't get scammed again. Novel idea for you? I'm not trying to "get out" of anything. I'm trying to ...wait for it...LEARN and possibly protect myself.

I'm sorry. I absolutely misread the following statement in your OP:

We only made 20% of the rental income that the agent and the rental company told us we would make and now I want out.

[B Rock]

Ok, good point. "I want out" meant that I want to sell the condo. Sorry for the snarky-ness.