At Legal Fringe, Empty Houses Go to the Needy

http://www.nytimes.com/2010/11/09/us/09foreclosure.html

At Legal Fringe, Empty Houses Go to the Needy
By CATHARINE SKIPP and DAMIEN CAVE

NORTH LAUDERDALE, Fla. — Save Florida Homes Inc. and its owner, Mark
Guerette, have found foreclosed homes for several needy families here
in Broward County, and his tenants could not be more pleased. Fabian
Ferguson, his wife and two children now live a two-bedroom home they
have transformed from damaged and abandoned to full and cozy.

There is just one problem: Mr. Guerette is not the owner. Yet.

In a sign of the odd ingenuity that has grown from the real estate
collapse, he is banking on an 1869 Florida statute that says the
bundle of properties he has seized will be his if the owners do not
claim them within seven years.

A version of the same law was used in the 1850s to claim possession of
runaway slaves, though Mr. Guerette, 47, a clean-cut mortgage broker,
sees his efforts as heroic. “There are all these properties out there
that could be used for good,” he said.

The North Lauderdale authorities, though, see him as a crook. He is
scheduled to go on trial in December on fraud charges in a case that,
along with a handful of others in Florida and in other states, could
determine whether maintaining a property and paying taxes on it is
enough to lead to ownership.

Legal scholars say the concept is old — rooted in Renaissance England,
when agricultural land would sometimes go fallow, left untended by
long-lost heirs. But it is also common. All 50 states allow for
so-called adverse possession, with the time to forge a kind of
common-law marriage with property varying from a few years (in most
states) to several decades (in New Jersey).

The statute generally requires that properties be maintained openly
and continuously, which usually means paying property taxes and
utility bills.

It is not clear how many people are testing the idea, but lawyers say
that do-it-yourself possession cases have been popping up all over the
country — and, they note, these self-proclaimed owners play an odd
role in a real-estate mess that never seems to end. Though they may
cringe at the analogy, as squatters with bank accounts, these adverse
possessors are like leeches, and it can be difficult to tell at times
whether they are cleaning a wound already there, or making it worse.

Either way, Florida is where they thrive.

Many residents of the Sunshine State have grown accustomed to living
beside a home left vacant for years. Now hundreds of these mold-filled
caverns, their appliances long ago spirited off, are being claimed by
strangers.

“There are all kinds of ways the people try to manipulate the system
to their own financial gain,” said Jack McCabe, an independent real
estate analyst with McCabe Research and Consulting. “And you are going
to see it here because Florida is the capital of real estate fraud.”

Mr. Guerette, who now faces up to 15 years in prison, insists that his
business is legitimate and moral. He said he got started last year,
driving around working-class neighborhoods in Palm Beach and Broward
Counties, looking for a particular kind of home: not just those with
overgrown lawns and broken windows, but houses with a large orange
sticker from the county reading “public nuisance.”

The stickers signaled owners out of touch: the county or city was
unable to reach them.

Mr. Guerette filed court claims on around 100 of these properties,
which appear to be in the process of foreclosure. Then he chose 20
that could be most easily renovated and sent letters to the owners and
their banks — presumably overwhelmed — to make them aware of his
plans.

Florida does not require notification. One state lawmaker tried and
failed to close that loophole last year with a bill that never passed.
But it hardly mattered. Nineteen of the owners and their banks did not
respond, Mr. Guerette said.

So he set about fixing up the unclaimed properties. In some cases, he
just mowed the lawn and replaced stolen air conditioners or broken
windows; in other cases, like with Mr. Ferguson, he let tenants make
improvements in lieu of rent.

At his peak last year, he said he managed 17 homes with renters, some
of whom he found on Craigslist, others through a Christian ministry in
Margate, Fla.

Copies of leases show Mr. Guerette included an addendum noting that he
was not the legal owner. Tenants like Mr. Ferguson and his family, who
had been homeless before moving in last year and paying $289 a month,
see Mr. Guerette as a savior.

And neighbors generally agree. “There is no telling who was in and out
of that house,” said Rawle Thomas, who lives next door to Mr. Ferguson
and his family. “I like them, and I’d much rather have someone in
there than the house empty.”

In other cases, though, adverse possession has been more aggressive
and problematic. In Palm Beach County, Carl Heflin spent a year in
jail awaiting trial on fraud, trespassing and burglary charges. But
after accepting a plea agreement and the rejection of his adverse
possession claims, he was arrested again on charges of trying to
collect back rents on houses he had tried to possess.

“The whole time he was harassing us and threatened to burn the house
down with my kids in it,” said Misty Hall, a single mother of two who
rented a home from Mr. Heflin.

Sam Goren, city attorney for North Lauderdale, said any benefits were
outweighed by a simple fact that adverse possessors often overlook:
they are trespassing.

Michael Allan Wolf, a real estate expert at the University of Florida
law school, said adverse possessors also disrupt the chain of title.
Rightful owners end up having to evict tenants. The time between
foreclosure and legitimate resale may be extended.

Even when adverse possessors help stabilize neighborhoods, “It is not
an effective or efficient cure for the foreclosure crisis in Florida,”
Professor Wolf said.

Mr. Guerette says his goals are more charitable. After several
marriages, six children and some minor trouble with the law, he said,
he is now a born-again Christian who sees his new company as a way to
make an honest living, and solve a dire need.

His tenants confirmed that after he was arrested in April, he told
them they could stop paying rent. Even if he is not allowed to keep
taking homes, he said, why should needy people not be matched with
homes left to decay?

“There are over 4,000 homeless in Broward, and the number is growing
all the time,” he said. “I thought I could use these homes and put
people into them. It could be a good thing.”

He added: “It’s not rocket science.”

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