MINNEAPOLIS - Imagine finally buying your dream home, moving your kids in and making your payments, only to find out it’s being taken away.
One local woman says that’s what happened to her. And KARE 11 discovered it’s happening nationwide.
Angela Woodard thought a townhome in Eagan was going to be her dream home.
“Absolutely perfect. Everything we wanted,” Woodard said.
But she was caught up in the perfect storm of a real estate transaction that seems set up to fail.
“I don’t want this to happen to anyone else,” Woodard said, fighting tears. “I really don’t. I would not wish these feelings on anybody.”
Our investigation found that what happened to Angela is happening to others because of glaring loopholes in the nation’s real estate laws.
“It’s the American dream isn’t it? And it becomes our clients’ American nightmare at times,” said James Wilkinson of Mid-Minnesota Legal Aid.
For Angela’s family it all started when she saw an advertisement for a townhome in the Surrey Heights development in Eagan.
“Loved the neighborhood, the schools, the community. And the neighbors are awesome,” Woodard said.
So, last December, her family moved in. But Instead of getting a traditional mortgage, she signed a so-called contract for deed with the owner.
“We come up with a down payment of $2400 and then pay $1200 a month thereafter until we had it paid off,” Woodard thought. “And it would become our own home at that time.”
Contract for deeds have become a popular option for people who might have trouble qualifying for financing. But there’s something Angela didn’t know about them. A contract for deed doesn’t have some of the basic protections that come with traditional home sales.
“I’ve never seen a good deal for any of our clients on a contract for deed,” said Legal Aid attorney Wilkinson.
He points to a study by the National Consumer Law Center which calls contract for deed agreements “Toxic Transactions.”
RELATED LINK: Study by the National Consumer Law Center
It says one of the problems is that sellers too often fail to disclose underlying liens and mortgages. That leaves open the that the house could “sold out from under the buyer” even if the buyer is current on payments.
“They may have made every payment to the contract for deed seller, and if the original seller is on a mortgage and doesn’t pay the mortgage, there can be loss of the home,” explained Wilkenson.
“And that’s legal?” asked KARE 11’s Lauren Leamanczyk.
“That’s legal,” said Wilkinson.
Angela says exactly that’s what happened to her.
“They told me they owned this place,” Woodard said.
“They” is a company called “Homebuyer MN LLC” run by former real estate agent John Marinoff.
Angela showed KARE 11 copies of cashier’s checks she says she sent to Homebuyer MN for six months, thinking she was buying the home.
“We wasted thousands of dollars,” Woodard said.
Property records reviewed by KARE 11 show that John Marinoff’s company did not have clear title to the home.
But Angela says she didn’t find that out until a letter from Marinoff himself arrived this summer.
“Please be advised that the first mortgage company foreclosed the home,” the letter reads.
Marinoff’s letter makes it sound like he’d just discovered the problem. “We were never informed as it was not our mortgage,” he wrote.
But there’s evidence that suggests John Marinoff knew about problems with the property all along.
KARE 11 obtained a copy of an email Marinoff sent to someone else about property in October, 2015. That was nearly two months before he offered the contract for deed to Angela.
In the email. Marinoff writes there are “major title issues” with the property involving an underlying mortgage.
In fact, records show that by mid-November the bank involved was even publishing notices setting a date for the foreclosure.
But Angela says Homebuyer MN never said a word about it. “We wouldn’t even be here, we would not have even moved in if that was – if we knew the truth,” Angela said.
John Marinoff declined KARE 11’s requests to sit down for an interview. When we approached him in person, he drove inside the garage and wouldn’t come to the front door.
Through his attorney, John Marinoff said his company had warned Angela about the underlying mortgage. But he did not provide any paperwork to support that claim.
For Angela Woodard it means uprooting her family and wondering whether she should have done more to protect them.
“I feel like I failed family for not knowing more, for not watching out for them better,” Woodard said. “I just don’t want to tell the kids we have to go.”
Since our interview, her family found a smaller home to rent. And she tells KARE 11 she’s contacted a lawyer to discuss her legal options.
Meanwhile, there are questions consumers can ask – and steps they can take – to help protect themselves in real estate transactions.
Mid-Minnesota Legal Aid has prepared a brochure with detailed tips, including warnings about contract for deed agreements.
RELATED LINK: Tips and warnings by Mid-Minnesota Legal Aid
If you have something you’d like KARE 11 to investigate, you can email us at: firstname.lastname@example.org.