Contractor Accused Of Unloading Condemned Home Acquired At Foreclosure Sale To Unwitting Single Mom, Leaving Her Homeless

In Scranton, Pennsylvania, WNEP-TV Channel 16 reports:

• A single mom in our area saved for years to make a down payment on a dream house. Ten months later, she was forced out when she learned the home she bought was condemned. Of all the houses on Eynon Street the one Teresa Shelp bought last summer appeared to her to be the newest and the nicest, outside and inside.

• Shelp said she saw the first sign of something wrong in her daughter's bedroom a month after she moved into the home. "The room the leak was in, there was a lot of water damage, a lot of drywall, ceiling damage. The carpet had to come out," Shelp recounted. Then the bathroom plumbing sprung major leaks needing expensive repairs. "And it just gets worse and worse, and bigger and bigger," said Shelp. Wiring shorted out causing smoke detectors to blare in the middle of the night for no reason.

• Shelp blames Dunmore contractor Rich Pennell who bought the home at a 2008 foreclosure sale. It was condemned at the time. Pennell made several repairs and later sold it to Shelp. Last week she learned the roofing, plumbing and electrical repairs were never inspected or permitted by the city. Her home was still condemned. "And I was the sucker that bought it," Shelp said. She could not go back to her condemned home to spend the night, if she did she'd be breaking the law.

• So for one day, she actually lived out of her car and then began hitting up friends for help. "And then you figure what am I going to do? It's getting dark, now I have to figure out where I'm staying and then you call somebody. Can I stay there tonight?," said Shelp.

• "I have been sick over this, honestly and I will do whatever I have to do at this point," said contractor Pennell. He is on the hot seat. The city fined him a year before he sold the house for doing plumbing work on the house without a license and real estate records show just before he sold the home Pennell signed paperwork claiming the city approved all final inspections.(1)

For the story, see Woman Blames Contractor for Condemned Home (A woman feels taken after buying a condemned home in Lackawanna County).

(1) This story should be a cautionary tale for all novice homebuyers and rookie real estate investors who, either knowingly or unwittingly, may be purchasing a home that was the subject of a recent foreclosure sale. In addition to the standard concerns one should have about any property that may have recently sat vacant during a foreclosure proceeding (ie. possible toxic mold, meth lab or indoor pot farm / marijuana grow house residue, "Chinese drywall" problems if the property was built within the last 5-7 years), checking that the certificate of occupancy has not been revoked and assuring oneself that any recent renovations were not performed without first obtaining the proper building permits (plumbing, electrical, etc.) should be added to the list of concerns for a would-be buyer of one of these properties (in some places, doing something as seemingly benign as replacing a kitchen countertop requires a permit).

Also, beware of a real estate investor looking to unload a recently-acquired foreclosure pursuant to a "seller financing" or under a rent-to-own / lease-option arrangement. This could be a sign that conventional bank financing may not be available because there might be a defect with the title to the property, and the investor is trying to recover his money by offering an arrangement where a novice homebuyer could be dissuaded from obtaining a title insurance policy (to this point, also beware of a seller of a recently foreclosed property (either a real estate investor looking to flip the property, or the foreclosing lender itself) who offers to obtain and pay for a title insurance policy on behalf of the homebuyer - you never know if the investor could be in cohoots with the title insurance agent to issue a policy on a defective title). Always obtain and pay for your own title policy from a company you find on your own when buying a recently-foreclosed house - even when dealing directly with the foreclosing lender (who, hopefully for the buyer, did not lack legal standing when filing the foreclosure action).

Also, take caution when hiring a home inspector to inspect a premises you might be interested in buying. For one story of a California home inspector who is now getting sued left and right for allegedly conducting crappy inspections that have left recent homebuyers none too happy, see Contra Costa Times: Brentwood leader's company crumbles in wake of questionable home inspections.