Scammed by HUD

[Vision710]

Texas

My family and I bought a HUD house in Euless, TX as an investment property in Jan 07. We were going to flip it. We've been working on it for 2 months now and last weekend, a neighbor told us that our houses were going to be seized by the city for a highway project in mid 2008. We went through Century 21 who was the seller's agent (HUD). According to the TX Dept. of Transportation, a letter was sent to HUD about the highway project but no one ever disclosed this information to us. Now we're stuck with this house that we cant sell and won't even to standing next year. I have a copy of the letter that was sent to HUD. We have spoken to an attorney but we probably can't afford the legal fees associated with civil litigation. Do you have any advice for us? Is there any chance HUD or Century 21 will rectify this situation in the name of "doing the right thing"? Or do they not care because they got their money and good, honest people got screwed. What should we do? Any advice would be greatly appreciated. Thank you!

[lcannister]

Seller's agent works for SELLER
HUD works for HUD

So who worked for YOU so that this might not have happened?

I do not know the standards whereby HUD would have to acknowledge this info to you.

[Ohiogal]

If the city seizes private property that falls under eminent domain and they will owe you fair market value for the home.

[nextwife]

Didn't you (or your closing agent/attorney) obtain the municipal "special assessment/ status letter" before closing? Letters from the various departments that would have knowledge of any arrearages on water/sewer/taxes, and any planned or commenced public improvements that affect the property?

[HUD-1]

First, get your papers together. Get a copy of the notice, show that HUD was the owner of record at that time and that DOT properly served the notice to HUD. (ie. does state law require certified mail? Was it sent to HUD or to the property manager etc) If HUD knew it was to be taken by eminent domain, they would have had a direct sale to the Town and not put it up for public sale. The question is, should they have known it and then disclosed it to you? I know that in many states, foreclosed properties and governmentally owned properties are exempt from disclosure laws. (By the way, what happened to your title search at closing?? This didn't come up?) Finally, you would have to sue HUD in Federal court. So package up your info and approach HUD and see if they are willing to take the property back for sale to the Town and give you a reimbursement. It can't hurt to ask. If the result is "no", then you will be reimbursed FMV when it is taken in the eminent domain action.

BTW, be careful of the use of the word "scammed". It implies fraud and/or cheating.

[Gadfly]

I have to say it really sounds like you didn't do your homework. Road projects don't happen over night. There is no reason you couldn't gleen this information during your due dillegence.

Rent the house until it is taken from you.

[acmb05]

Originally Posted by Ohiogal

If the city seizes private property that falls under eminent domain and they will owe you fair market value for the home.

Which could turn out even better for the homeowner than if they were to try selling it themselves.

Example: My partner and I have a home that we were going to list for 225,000 when we finished improvements. The city is now moving the road project and going right thru the middle of this home. Comparable home sales in the neighborhood are around 110.00 a sq ft. We were going to be selling for 85 a sq ft. to sell it fast. therefore the fair market value is 330,000 a little over 100,000 more than we would get if we sold to someone else. Now this is not to say we will get that much for it but there is a very good chance we will get quite a bit more than what we were going to ask for it.

[HUD-1]

Yes, there always seems to be some type of "premium" paid over fmv to those whose homes are taken and rightly so, IMHO. Remember the Supreme Court case in CT? The owners made out ok financially, especially the holdouts...