My long, sad, ugly real estate investment experience.
Some 4 ½ years ago I bought a lot and invested in a new planned community in Enoch City, Utah. That's on the north end of Cedar City. They called it the Parkview development. This was my first and only real estate investment. In April 2008 I got a construction loan to finance the building of a house. The builder was PP&D Construction.
Unknown to me at the time was the fact that the sewer for the Parkview community was not finished. Enoch City had decided to not issue any building permits until the sewer infrastructure was complete. That only makes sense. However, PP&D, without my knowledge and against my wishes, if I had only known, asked Enoch City for a waiver. On May 5th, 2008 PP&D signed a waiver with Enoch City accepting liability for the sewer not being finished, and therefore received a building permit to start the house. If I had known about the sewer, or the waiver, I would never have agreed to start building.
I live in SLC and do not get down that way very often. As the construction of the house proceeded, PP&D was not honest with me. They spent many thousands over the construction loan limit and then did not install some of the things that I paid for (A/C rain gutters, etc.). They went past the due date of the loan and then lied to me again when I asked them if the sewer was connected and ready. When they finally told me that the house was finished (January, 2009), I was expecting to get an occupancy permit very soon. Because the loan was due and I could not get an occupancy permit, I was unable to get a mortgage on the house. Instead, I was forced to get a high interest loan at 7½%, with monthly payments around $2,000. I have been making those payments for more than 3 years now, although it has been quite a struggle, to say the least.
Still not knowing anything about the sewer situation, I believed that we were close to getting an occupancy permit in Feb 2009 and had the natural gas service turned on. While talking with the city inspector in late Feb 2009, hoping to get an OP, that is when I first heard of the waiver. He sent me a fax of the waiver.
PP&D was unwilling to do anything to resolve the problem and I had no money to take legal action. A friend who is also a real estate attorney offered to take the case pro bono. We won a settlement, but got nothing, because PP&D had declared bankruptcy, was no longer in business, and had no assets.
Meanwhile, the city inspector helped me find a solution to the sewer problem. It was a dedicated, pressurized sewer line from the house to the city sewer and would cost just under $12,000. I had no money, but my credit union offered to let me use some of the money that I had put down for collateral. Again I thought we were close to getting an OP when I found out about a geological problem - a 2 ½ mile long fissure that was growing from the north and headed toward my house. The fissure prevented the city from connecting a water line. That was a little more than 2 years ago. Since then the fissure has turned and headed east. The city has a way to connect the water, but has not done it. Their position is that they are not obligated to connect the water, because of the waiver that was signed for the sewer. I pointed out to the city council that the waiver clearly refers only to the sewer and does not mention water service at all. The citys attorneys response was that, even though the water connection was not mentioned in the waiver, it was the intent that it be included with the sewer. I disagree with the attorneys interpretation, but that is the reason that the city has done nothing about the water line. BTW, the attorney is a certified jerk. It is frustrating that a person like that can have such a negative impact on my life.
With no water I can do nothing. The house has been vacant for more than 3 years and has become a target of vandalism. Adding up insurance, taxes, and all other expenses, I am losing close to $30,000 per year, and that does not include the vandalism costs. If the city had connected the water 2 years ago, there could have been a family living there to prevent vandalism. I was not aware of the vandalism until this Wednesday, 5/16, when I went down to speak to the city council. My insurance will likely pay for repairs, but the original problem still remains. I am not going to fix up the house if I cant get a water line to it.
Here is a 13 minute video of the extensive damage that has been done to my house: