CALIFORNIANS SCAMMED BY PROPERTY ID MAY GET NOTHING
INDUSTRY NEWS
February 23rd, 2009
Last summer, HUD settled a lawsuit with Realogy and Property Id regarding
an unlawful kickback scheme that lined the pockets of real estate corporations with millions of dollars bilked from more than 300,000 home sellers in California. Now, it appears Property ID will be insolvent if they paid the judgement. Realogy and Property ID have maintained all along they did nothing wrong.
This could mean the clients of the real estate firms involved who recommended purchasing the overpriced Natural Hazard Disclosure reports through Property ID will receive little or nothing. The settlement required a refund of the report cost of either $100 or $114 for the Natural Hazard Disclosure reports. The attorneys representing more than 40,000 claimants in the class action suit stand to pocket nearly $10 million in attorney fees.
Terms of the HUD settlement required Property ID to disclose the addresses of the victims but not their names. The settlement administrator had to do some detective work to track down the victims. Too bad Property ID was not more forthcoming with all the information to aid locating those duped in this scam. The attorneys have used print ads in 130 newspapers and mailings in attempts to track down more than 330,000 Californians who bought the reports. Thus far only 42,566 have filed claims. They guesstimate about 77% of California homeowners have been reached by the campaign. The deadline for filing a claim is only a few weeks away.
Property ID used $50 of the report fee to cover expenses and split the remaining $50 profit with referring brokers, according to a report in Inman News dated Feb. 12,2009. The real estate companies involved in the kickback scheme include Coldwell Banker, Prudential California Realty,ERA, RE/MAX and Century 21.
Locally, firms under these names have denied any involvement. This could easily be verified if Property ID or Realogy made the addresses available to the public. Some of these franchisees are independently owned and operated.
“The settlement would require Realogy, the “deeply indebted” parent company of Coldwell Banker, Century 21 and ERA Real Estate, to pay $21 million to reimburse clients who purchased Property ID natural hazard disclosure reports between July 31,1996 and June 30, 2006″ according to Matt Carter, writer for Inman News. Perhaps Realogy will follow Property ID’s lead and claim this will make their debt laden company insolvent.
Thus far, the settlement favors the attorneys that brought the class action suit and with Property Id’s inability to pay it’s share, less than $30 million is available for reimbursing victims.
The settlement, as it currently stands, requires:
- Realogy pay $27 million
- Prudential California Realty pay $4.34 million
- RE/Max pay $498,474
- Property ID pay $7.5 million
According to the Inman News article, the attorneys are entitled to 25% of the settlement for fees and expenses. Any unclaimed funds, which will be substantial, will revert to the defendants or their insurance companies, based on the small percentage of victims that have filed for claims. I guess crime does pay!
This legal mess is likely to continue for years because some potential claimants may appeal and other victims not part of the class action may pursue separate litigation against the companies involved. This could hold up the settlement for quite some time. Stay tuned for updates as this drags on.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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