Equity Skimming Part Of The Mess For Virginia Beach Landlord

The reported collapse of Virginia Beach-based landlord, CM Development, that has left it facing foreclosure, with outstanding real estate tax debts, and under the jurisdiction of a Federal Bankruptcy Court has left its tenants in a bad spot, according to a recent story in The Virginian-Pilot.

• "I won't get my security deposit back," [said one tenant] of the $750 she put down 18 months ago when she moved in. "I can't even find anybody to get it back from. So that's it." CM Development was forced into bankruptcy this summer. Its collapse has left some of the region's most vulnerable residents in a difficult spot. Living in houses that are no longer being maintained, renters have found the company also is holding much of their savings in the form of security deposits, making it harder for them to move.

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• In some cases, tenants have been evicted because the company stopped paying water bills or because their house was foreclosed upon. [...] Under Virginia law, landlords must return security deposits within 45 days of a tenant moving out. Some CM Development tenants who moved months ago said they still haven't received their money.

Reportedly, a Virginia-Pilot investigation "revealed that CM Development financed itself by selling its properties repeatedly among a group of about 30 investors (ie. straw buyers), who took out ever larger bank loans in their names. In exchange, the company would pay investors money up front, then agree to manage the properties and pay the mortgages and taxes." For more, see CM Development's bankruptcy leaves many In a bind.

Go here for posts and links to other stories on CM Development and Cary McEntee.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. equity skimming unwittingly delta