I wanted to deviate a little and tell the story of how I first came into the business, on somewhat of a negative tone, but took that negativity and turned it into a positive learning experience. Keep in mind the following events begin while I'm in my early twenties.
A relative got into a supposed real estate partnership with a certain real estate broker. I found out things had gone sideways when investors came knocking on the door. The investors, two well dressed gentlemen, asked if we were interested in a cash buyout on our apartment building since we had fallen behind on payments. What payments? This property was paid off years ago.
I contacted the broker I knew he dealt with from time to time, to which he began explaining that my relative refinanced the property and gave him some money to invest. He apologized for the misunderstanding and promised to catch up on the payments. Sure enough, he made about three payments, then stopped making payments again.
I went to his office to find out he had disappeared, and at that point decided to file suit. My attorney was skeptical we could win, as the first rule of real estate law is all contracts must be in writing. At the same time, I was pursuing a business degree and had just taken business law. I took a gamble on invoking Breach of Fiduciary Duties, and I did have enough evidence to prove the relationship. My first piece of evidence was a cancelled check from the broker's business account for "rents collected", clearly showing his name, his business address and relative's name. The second piece of evidence was the loan documents from the loan he talked my relative into taking out, listing himself as the point of contact. The attorney still had the wire transfer of funds in his files from his office to the broker, also making him a material witness. I was also able to dig up evidence from a flip deal by the broker listing the relative as the purchaser, and then a few months later as the seller, and check issued to the relative.
I had to learn how to retrieve records at the County Recorder, which I spent the equivalent of about a month's worth of time searching records (Assessor records weren't online yet). The task was to locate addresses he could be at, assets he owned (specifically property with equity to attach), and to put together a picture of his movements and motivations.
As time went on, he started shifting the way that he conducted business, which introduced me to a new part of the game. I noticed as I kept pulling records that he started holding properties in Deed(s) of Trust instead of Grant Deed(s). When I brought them to the attorney, he explained using a Deed of Trust isn't necessarily bad in and of itself, but it is a way someone possibly involved shady activity can control a property without appearing to own the property in case creditors wanted to pursue them legally.
I ran into one of his former agents on a whim. He was more than willing to offer some back story after I shared my story. The former agent offered his insight after sharing that he had to sue the broker for his last commission check. He gave me a corroborating story (like the relative did): it seemed like he started off with good intentions, but after he got married, it just looked like his wife was bringing people around that could be described as "shady", then he got increasingly shadier with his business the more he spent time with shady acting people.
On the court date, standing in my relative's place ( he was terminally ill by this point), I was able to take the witness stand and testify all the facts of the matter to the judge's satisfaction. The broker decided not to show (later claiming he was never served a Notice to Appear). We were able to dispel the lack of proper service to the judge's satisfaction on the following: He was served by Certified Mail at his last known home and business addresses, both receipts returned verified as unoccupied by the Post Office. We also sent service and Notice To Appear to his last supervising broker, implicated by having received money on the broker's (alleged guilty party) behalf. They were more than willing to give up information and documentation showing the alleged guilty party acted independently and they would be willing to make an attempt to contact him. We could document the alleged guilty party did return phone calls to myself and his former supervising broker. I walked out of court with judgment in hand; after listening to the way I laid everything out, we were only pushing for a refund plus interest on the grounds of broker negligence. The judge deliberated and actually came back with a decision of Theft, Conversion and Malicious Intent to Defraud.
Had I known what I know now, once we got the civil judgment, I could have filed a lis pendens, frozen his assets, and appealed to the state Real Estate Commission to suspend his license. Once the appeal for suspension was made, I could have then petitioned the Real Estate Recovery Board for satisfaction of the judgment.
The strongest piece was the most intricate. I had a side hustle in college installing radios and speakers that eventually led to purchasing cars from the auto auctions and reselling them for profit. I needed a business address after a certain point, so the relative was excited to tell me he had commercial zoned vacant land I could rent, and to give the broker a call about getting access to the property to set up. The broker actually met me at the address the relative gave and stated to me "This is his property, I collect rent from the little restaurant there." When things changed and it was time for court, pulling the records on the property showed it being sold to a woman I had never heard of. Going back to the random meeting with the former agent, he revealed that was the broker's wife's maiden name. That led the judge down the train of thought of 1) why would I just randomly pick that address? 2) what are the odds that not only could I describe said property, but the title search revealed his wife owned the property, but in her maiden name, not her married name?
What I found that could be done is to write the judgment off as a business loss in a year you also paid a large sum in taxes from a business, declaring it as "bad business debt".
After the judgment, the broker went "off the radar" for years, then like magic, when I filed to make the judgment an asset of my relative's estate, he resurfaced, claiming our action was blocking his license renewal. He was then able to be officially served, leading us to deposition and eventually mediation. The deposition was chocked full of nonsense I couldn't wait to blow up. At one point, I even discovered it appeared as if he was paying his attorney through one of those Deed of Trust instruments, even though it wasn't necessarily material in court.
I got a great education about the ugly side of the legal process when my attorney was on conference call with the broker's atty, and I heard the other attorney calmly and matter of factly say "my client doesn't really have a case, so I'm just gonna try to smear your clients' character."
In mediation, once we finally met face to face after years, the mediation was a wipeout for them. After reviewing my documents and reviewing their documents, the mediator actually said to the broker, "this is the only case I've seen where the client maintained better records than the broker. I suggest you come to a quick resolution."
What I learned useful from the experience:
Get everything in writing. There's no guarantee the other side will make documentable mistakes like in this case, giving you opportunities to recover and capitalize on. However, in a conflict, someties its good to be underestimated. The opposing side might let their guard down, not regarding you as a serious threat.
I got to sharpen my skills firsthand in the legal system, which has come in handy in my understanding of how the legal system works. I got to see real estate law, contract law and estate law firsthand.
I learned how to research and track people and assets, and on the downside, how to connect up what I learned from the research to put together a picture of what someone might be doing, and anticipate their next move. Had I known what I know now, I needed to expand my searches to the neighboring counties (the county I lived in at the time was fairly large) to search for information. It wasn't good enough to search just locally.
I've learned almost every trick and deception a person can pull when they don't want to be found but want to retain their assets. I've had others try to get me caught up in different things here and there, but since this experience, I always seem to stay a couple of steps ahead, until you can cut off your business ties.
If I've seen the worst case scenario play out, then I can also see how the best case scenario should play out, where it's legal, productive and everyone gets what they want out of it (leaving with more money than they started with).
I did so much research, I almost didn't need to study for my first real estate exam.
I learned the beginnings of the art of weaving broken pieces together to create a useful picture.
Deals will go south, it's just part of the nature of business. Sometimes situations change in partnerships that started off with good intentions. Any way it goes, always protect yourself. Our best case scenario: we never got involved with the broker in the first place. Our asset was already paid for and generating income. The money gained from dealing with the broker didn't add up to what was lost in time, stress, expenses and opportunity cost in the end. Each had ripple effects as in time I could have been doing something else (or relaxing), money spent pursuing the case and research could've been invested in another property, or enjoyed on different activities. The experience I picked up can't be taught in school, and most people aren't truly aware things can go this sideways. I'm known for having a certain calmness and coolness under pressure; living this out was one of the places that calmness under pressure was forged.
One of the keys here was knowing to invoke something and knowing what to invoke. It's appalling to me how hard it seems to find these things within the law along with the knowledge of how to invoke them properly.
Good on you for following through, for building such a great case and for presenting it here for us to learn from!
As for hiding assets, I've just come to accept that if I want to be free from anyone's "grip" I need to learn to live with nothing and be happy with it. Literally. I don't have the time and energy to hide things, only to have them penetrated by those that lie to begin with, when those proven lies are never prosecuted or held up for inspection, when false accusations are believed more than proven ones in today's legal systems.
Central banking is a cancer to our society.
The hidden law agendas keep it that way from the public.
Bad lawyers give good lawyers a black eye.
And then there are shining examples like this one that still give me hope. I would have found this story sooner, but I've only recently learned how to find things under the tags that interest me.