Moral, Ethical?

[Jims5543]

In October 2003 I was hired to survey a property for a builder. Typically the builder would order 30-40 lots at a time. It was unknown to me that they would close without a survey in had.

Well, one lot I surveyed had a house encroaching onto it over 10 feet rendering the lot unbuildable.

We found it hard to believe there could be a error this large. We searched the public records for replats, and re-checked out work in the office and in the field 4 times over. This covered a time of about 7 weeks.

We then determined the house to be on our lot and prepared a survey and delivered it to the builder. Unfortunatly they closed on the lot. To say they were pissed at us for not telling them right away would be an understatement.

In an effort to smooth over everything, I offered to purchase the lot. At the time they paid 24K for it. This was now almost a year later. 3/2004 to be exact. A closing date was never set and it kind of fell to the wayside. Then the hurricanes of 2004 hit. Everything was upside down for all of us. Then Hurricane Wilma hit in 2005, again we all forgot about closing this lot.

During all this mess, I was hired to survey the house that is off the property. I was hired in October 2004. I did not realize which house this was when hired but, it quickly became apparent which proprty this was when we arrived at the property.

I contacted the homeowner explained her house was off the property, and I explained I was supposed to buy it but could probably hook her up with the builder to buy.

She did nothing for 2 years until right now. I have been contacted by the attorney to be hired to provide an opinion on if the house is off the property.

As fate would have it I recieved a call this morning from the builder. They dug up this property and are now super pissed we have not closed on it. I told the owner to set the closing for Sept. 13th and to give me the amount of the sale. Bottom line is my builder comes first, they are my client and make me lots of money. I am paying 35K for the lot now after figuring interest and other costs.

So here is my dilema, the Attorney knows I am paying 35K for the lot and wants me to sell it for that much. Fair market value is in the 70-80K range. Besides the 35K I will have to pay about 3K in closing costs as well.

So do I sell for what I have in it or do I sell for fair market?

Part of me says to sell at fair market. Another (my nice or sucker side) says sell for what I have in it.

[id10t]

Split the difference?

[RickM]

You might want to consider setting your price between the two.

[Evans, Marv]

Assuming you are just selling it on the public market, why should you sell it to someone you don't know at below market value? If you want to make points with your builder, why don't you sell it for market value on the open market & split the difference with them as a way of showing fairness. After all they sold it to you for under market value. Or, maybe I'm not understanding the whole situation.

[competentone]

Originally posted by Jim Cesiro
So do I sell for what I have in it or do I sell for fair market?

Part of me says to sell at fair market. Another (my nice or sucker side) says sell for what I have in it.

Sell for fair market value.

Save your "niceness" for friends and family.

That said, if the lot is not buildable, is it's fair market value of $70-80K accurate? How much would it cost to move the encroaching house? Can the encroaching house owners put up any legitimate legal battle (adverse possession?) to take part of the lot? Just as you made the "good business decision" to buy the lot from the builder, would there be any "good business" reasons to take less than fair market value for the lot?

[Jims5543]

Builder wants to lot gone they do not care what I do with it. They build houses not flip lots. The builder purely wants their 35K back out of it.

The nice guy in me says sell it for what I got in it.

The capitalist in me says, hey if you were on the other side of this someone would be making you pay over fair market. (I have been on the other side of this and paid twice fair market)

I think it is VERY resonable for me to sell it for fair market. Of course the attorney for the homeowner that need this lot thinks no markup is fair. He is trying to implicate lack of moral character if it is sold for any more.

[gaijindabe]

Originally posted by Jim Cesiro


I contacted the homeowner explained her house was off the property, and I explained I was supposed to buy it but could probably hook her up with the builder to buy.

She did nothing for 2 years until right now. I have been contacted by the attorney to be hired to provide an opinion on if the house is off the property....

So here is my dilema, the Attorney knows I am paying 35K for the lot and wants me to sell it for that much. Fair market value is in the 70-80K range. Besides the 35K I will have to pay about 3K in closing costs as well.

During the two years could you easily be contacted? Was the homeowner waiting for you to get back to them? Are they looking to flip this lot themselves or round out their property?

The builder is your customer and you want to keep them happy - how about the lawyer? This is a small world we live in...

[competentone]

Originally posted by Jim Cesiro
Of course the attorney for the homeowner that need[s] this lot thinks no markup is fair. He is trying to implicate lack of moral character if it is sold for any more.

No, he is trying to manipulate you.

In fact, if you're in discussions with him, the moment he makes the implication, say something like, "Well...OK, I'll sell it for $90,000."

When he protests, and if he again tries to imply "lack of moral character" on your part, raise the price to $100,000.

I'm serious too, what you've just related makes me conclude that you definitely should not try to be "nice" in this situation.

Make 'em pay!

[GDSOB]

So, who would be on the hook if the market price went to $5000?

You were bound to close on the lot and absorbed the risk.

Split the difference if you feel generous.

[M.D. Holloway]

Your not doing anything illegal, unethical or immoral. Your conducting business and the function of business is to make a profit legally. The ethic and moral factor is something you will have to decide on. Pure and simple.

This ain't charity its business - bend the slob over a nail keg and if he screams break one off inside'm.

Now, where is a kitten I can eat!!!

[arcsine]

Housing developers and attorneys talking to you about financial moral character? That is a good one.

Sell it for what the market says it is worth. If you feel guilty, donate part of the profit to a suitable cause.

[Porsche-O-Phile]

How did they close without a survey?

[competentone]

Another thought: What if the situation was that you had made some error with a survey, and using your incorrect survey, someone build a house that encroached on the neighboring lot.

If you were now dealing with the house owner and his attorney, do you think they would be concerned with being "nice"?

I wonder who did the survey when the current encroaching house was built? Or did someone just pace it out and "guess" where the corners of the lot were? If the current house owner doesn't like what she has to pay to correct the situation she's in, she can try to seek redress from the parties responsible for her predicament. You're not responsible for the errors (or "sloppiness") of others.

[Rikao4]

The Lawyer talking about your lack of morals or ethics..
to funny..

Rika

[Jims5543]

Originally posted by Porsche-O-Phile
How did they close without a survey?

The house that is in my property by 20' was surveyed wrong 15 years ago. The current owner purchased the house cash and decided to save $300 in closing costs and not get a survey. You you like to know how many times I have told this story to people that think we are just taking their money?


compentone- I was on the other side of this. My field crew got spun around and everyone, including me, followed like lemmings as we had a builder build a house 1 lot in the wrong place. Hard to explain in writing.

At the time lots cost 25K and the owner of the particular lot that the house was on owned over 400 lots in this town. No lie, maybe more.

He wanted 60K for the lot even though it was worth 25K. He got it too. I wanted to hunt the guy down and hurt him for cashing in on my mistake.

Another option for the guy was to trade lots and he refused to . So we had to buy it for 60K.

Now I am on the other side of this scenerio, the surveyor that made the mostake retired 4 months ago so finding him and suing him will be next to impossible.

Part of me wants to make $2 on the $1 in a quick turn around investment. Its obvious insurance companies of some sort are going to have to pay. But them I turn into what I detest. I am not buying this lot to cash in, but the idea of it, especially with this slowing economy, is VERY tempting. My business is in bad shape right now and I am trying to decide if I am keeping it the same much longer so a 35K windfall right now might be a good thing.

[Acox914]

fascinating....

im a CE major and have read about these kinda things LOL...

sell it for fair market, and toss some your builders direction

[Jims5543]

I have cut off communication with the lawyer for now.

Aaron - thats my plan, a decent amount of money in a brown bag on the president of the companies desk.

[widebody911]

Life += lemons: sell at market, take the cash, move on.

[Rot 911]

The attorney is just trying to take advantage of you. If his clients buy the property for the $35K do you really think they will sell it for that price when they move on? If he continues to attack your morals either tell him to fuch off or say ok, but there is a restriction in the deed transfer that says his clients can only sell the property for what they paid you for it.

[competentone]

Originally posted by Jim Cesiro
Part of me wants to make $2 on the $1 in a quick turn around investment. Its obvious insurance companies of some sort are going to have to pay. But them I turn into what I detest. I am not buying this lot to cash in, but the idea of it, especially with this slowing economy, is VERY tempting. My business is in bad shape right now and I am trying to decide if I am keeping it the same much longer so a 35K windfall right now might be a good thing.

Actually, you might do better -- depending on your individual tax situation -- if you don't close on your sale of the property until after you've owned it for more than a year. If you sell it before a year, it will be considered a short-term capital gain, and will be taxed as ordinary income. After a year, you should be able to sell it with any profit being taxed as a long-term capital gain -- which caps out at 15%. You might want to talk to a tax professional for some advice on this one before signing any contract for the sale of the lot.

Also, if you did sell it for well under the market value, I don't know how the IRS would look at a transaction where you effectively "gift" $35,000+ of value in the property to the encroaching house owner. It sure would be a b*tch if the IRS went after you for "gift taxes" on the amount you "gave away" over the property's fair market value! I think the phrase "No good deed goes unpunished" might apply if that were the situation!