Investor to Condo Owners: Pay $80K to Use Driveway

June 10, 2010 — -- The slumping real estate market has offered opportunities to savvy land investors, but a group of condo owners in Oklahoma said they got the raw end of someone else's bargain when they found that they couldn't access the driveway in front of their building.

"We're being held up for ransom here -- this is ridiculous," said Hedi Lunday, 77.

Lunday is one of four condo owners in the Timberdale Estates development in Edmond, Okla., who were temporarily prevented from driving their cars into their garages after a land investment company that bought land abutting their homes erected concrete barriers on the driveway for one afternoon last month. Lunday's fellow building residents include other elderly people, including a man who walks with a cane.

The company, RJS Properties LLC, bought the land at a Oklahoma County tax sale in 2008 for $1,584, according to Oklahoma property records, after the land's developer failed to pay taxes on it. The company later offered to sell condo owners the property for $80,000 but the offer was rejected.

"It was a fair deal," said Ron Edwards, an agent for RJS whose wife owns the Guthrie, Okla.-based company.

Edwards said he had barriers placed on the land in an attempt to convince the condo owners to change their minds about the RJS offer. The barriers came down after less than a day under an order from local fire officials, who said the barriers blocked emergency vehicles' access to the homes.

Condo owners later won a temporary restraining order to stop Edwards from erecting any new barriers and say they're now fighting to keep it permanent.

That particular legal battle is part of a larger war that residents waged against RJS and the county over the sale for two years.

Residents were stunned to learn two years ago that their condo association didn't own the property -- Oklahoma County officials said the developer failed to cede the property to the association -- and that taxes on it hadn't been paid. Arguing that they didn't receive proper notification about the tax sale, residents sued the county and RJS in 2008 in an attempt to cancel the sale.

Late last month, a judge ruled against them.

Investor: 'I'm Tired of Being Hassled'

Condo owners say they will appeal the decision and are worried that RJS will find other ways to keep them off the driveway.

"We wouldn't have access to our garages. We couldn't park our cars in our garages," said Kenneth Wegner, the president of the Timberdale Estates Homeowners Association who is also one of the four condo owners affected by the RJS deal. "These are older people. It's difficult for them to walk long distances."

Despite criticism from the condo owners and scrutiny from local media, Edwards maintains he's done nothing wrong. He acknowledged that there had been some confusion over the property's title and deeds relating to it, and said he would have taken the legal steps necessary to clear that up before selling the property to the condo owners.

Edwards said he originally hoped to make a $40,000 profit on the property after taxes, insurance and other costs.

"My original plans were to clean up all the deeds and title and give the property back to the people and make a few bucks on it," he said. "Instead, they chose to take me to court for two years."

"It's just one of the deals I do," Edwards added. "I'm getting tired of being hassled about it."

Edwards said that RJS has purchased at least a dozen properties at tax sale in recent years, including a road in another condo development and a parking lot adjoining a Mexican restaurant that he now leases to that restaurant.

"Some of [the deals] worked out good, some of them didn't work out at all," he said.

Wegner has a different take on Edwards' and RJS' business dealings.

"His business model is to acquire tax sales of property that will cause inconvenience to people," he said.

Tax Sales: Do Your Research

The legal battle between RJS and Timberdale condo owners notwithstanding, John L. Pherson, the author of the book "Investing in Vacant Land: It's Not What You Think," said that buying land at tax sales can prove worthwhile, provided the buyer has done his research.

Laws on tax sales vary from state to state, he said.

"Knowing laws in the state that you're operating in is very important and so is making sure that when you buy at a tax sale that you can get clear title to the property," he said.

Pherson, who has invested in vacant properties in the U.S. and Canada, said it's unusual to hear of investors accused of buying land to take advantage of neighboring property owners, as Timberdale condo owners have accused RJS of doing.

"It is such a specialized circumstance that I doubt you would find many opportunities like that," he said. "It's certainly not a strategy that I'm familiar with."