Homes Completely Destroyed By Mistake

Act 2: Several people who found their properties wrongly demolished struggle for compensation.
7:39 | 11/15/13

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Transcript for Homes Completely Destroyed By Mistake
we're going to turn to the home wreckers, but not what you might think. These are the crews hired to flatten homes. Make way for new ones. What happens when they get the address wrong and knock down your home instead? Tonight abc's jim avila on the fight playing out right now should these home wreckers have to pay up? You'd be surprised. New dining room will have -- Reporter: It was supposed to be the retirement home of their dreams. Soon to be empty-nesters david and valerie underwood had a grand plan, to fix up this ft. Worth house and move in. It had been david's grandmother's, a gathering place for family holidays, filled with cherished memories. That was our first third-generation christmas. Reporter: Then last summer, after hiring architects and builders, the underwoods drove by to check out the condition of their lawn. I've got mowing, weeding to do. But -- Reporter: Then a shocking discovery. Something was missing. Right about here she taps me and goes, "david, the house is gone." Reporter: It's totally gone. It's totally gone. It's totally gone. It was surreal. Reporter: That's right. The lakeside view was intact. But the 1,200-square-foot home gone. Where are we kind of standing? This was the garage, and the living room was right over. The bedrooms were back on that edge of the house. That was the patio. Reporter: How on earth could a house just vanish into thin air? Believe it or not, the city had bulldozed it by mistake. They even took pictures of their handiwork. I was just shocked, like you know, what in the world? Like, how do you tear down the wrong house? Reporter: The underwoods' house is 9716, clearly marked on their mailbox. The right house, the one the city was supposed to demolish, was next door at 9708. But somehow the brain trust at city hall managed to mess that up. And in today's world of gps, when you can spot something the size of a nickel, I would think that -- you can. -- That there would be a fail-safe. Reporter: A onetime occurrence? Actually no, according to real estate mogul barbara corcoran. It happens more than you think. You could probably find at least one home wrecked in just about every city across the united states by mistake. Reporter: Demolishing the wrong house is actually hard to do, according to new jersey contractor lou santora. It's basically just completing a mountain of paperwork. Letters from your asbestos compan the gas company, the water company. If you're a competent contractor things like this shouldn't happen. Reporter: That's small comfort to andre hall. He figured he had the wrong address when he saw a backhoe tearing down a house. I was like, "oh, somebody's house is getting knocked down. It can't be mine." I drove around the block and came back, and it was my house. I was just in shock. Reporter: He had poured his heart and soul into fixing up the pittsburgh house, prepping it so his three daughters could move from living with their mom out of state to be with him. I put new glass, put new frames, new windows. I did everything I had to do to get this house right. Reporter: He even painted his daughters rooms. There's no place like home. And now for hall, that's way too true, because there's no home period. It's gone now. It ain't nothing but an open lot. Reporter: Hall hit rock bottom. Today he lives in an apartment without his daughters. Nobody wants to take the blame. The contctor points the finger at the city. The city points the finger at the contractor. Reporter: You'd think when your house gets bulldozed by mistake you'd get compensated, and quickly, but you'd be wrong. Jessie vernon is a good example. Here are pictures of his little rock house being demolished last year. The city-hired contractor admitted to a local tv station that he made a big bulldozer blunder. There were two houses side by side, and I didn't look close enough to figure out which is which. Reporter: But adding insult to injury, vernon has not been paid neither by city nor by the contractor. And listen to this bold reasoning from the contractor's attorney. They say they did vernon a favor. I think mr. Vernon actually benefited from what my client did. And I'll be glad -- Reporter: He knocked down the house and benefited from it? That can be made to sound terrible, and normally I assume it would be. Reporter: Well, if it was your house, you would think it was terrible. Surely. Surely. But the city had told mr. Vernon months before this to either get a permit to fix this house up or to demolish it. My client just hastened what was probably inevitable. Reporter: But that's not your client's decision to make. He can't undo it. You can't unring the bell at this point. Reporter: But vernon says he was planning to repair the house to rent it out. Vernon went to a city council meeting to try to get justice. Good evening, I'm jessie vernon. Reporter: No luck. Mr. Vernon's and the city's interests are not aligned. Reporter: File that under legal talk for "sorry, chump." We had to ask a few questions. Is it really not your fault? You have no responsibility for this? The people you hired knocked down the wrong house. Yeah. The people we hired didn't do what we hired them to do. No, I don't think that we have a legal responsibility for that. Reporter: So if I hired somebody to knock down my porch, and they knocked down my neighbor's porch, don't you think my neighbor's going to come after me, not just the guy who knocked down the porch? Well, I think so. But you don't have immunity from negligence actions, as local governdo. Reporter: Wait, come again? You don't have immunity from negligence actions, as local governments do. Reporter: You heard right. Some local governments are off the hook from lawsuits. So if they hire a bungling backhoe that happens to flatten your home sweet home you're on your own. Where does that leave vernon? The city advised him to sue the errant contractor. It would cost me money to sue. And I shouldn't have to pay a dime. All I've heard is talk. Reporter: Back in ft. Worth, talk is all david underwood has been hearing, too, even though the city admitted they made the error. In a statement to "20/20," they said they have -- "reviewed city policies and procedures and added a series of additional checks." But they still haven't paid a check to underwood. You must be a little ticked off by now, right? Well, frustration's growing. Reporter: Especially since for the years that the city was collecting taxes on the house, before it was demolished, it was appraised for $82,000. But now that the city might have to pay for the wrecked house there's a new appraisal for just 25 grand. You can't buy a car for that, much less a house, right? Exactly. Reporter: We wanted to ask the city about that, and since they wouldn't talk to us on camera we went straight to city hall to confront underwood's councilman. Hi, I'm jim avila. From abc news 20/20. Nice to meet you. Are you disappointed at all that the city has not come forward when they admitted they made the mistake? We are going to settle with this gentleman, but there has been some discourse over total settlement value, and that's where it's at right now. Reporter: But has the assessment been reduced in order to pay him, pay him a lower amount? I can't answer that. No, absolutely not. Reporter: The underwoods still hope they can salvage their dream house, rebuild. But the memories they had, those have been demolished. And so what is left of your dream at this point? Uh -- it's a new dream. It's a new vision. It's a -- yeah. We're going to have to build a totally new house now. There's not going to be that tie to my childhood. It did mean something to me, obviously. If I'd want it torn down, I'd have torn it down. A lot of fingers pointed in this one. Who should pay? The contractor or the town that hired them? Use the #abc 20/20. When we come back the story from

This transcript has been automatically generated and may not be 100% accurate.

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