The Tax Woman Cometh
A D V E R T I S E M E N T
A D V E R T I S E M E N T
Day of reckoning could be near for old-home buyer.
By BETTY BRINK
Tony Smith, bondsman pretender and old-house-buyer extraordinaire, may be wishing he’d paid more attention to those tax notices he’s been getting for the past seven years.
Within days of a story in the June 27 issue of Fort Worth Weekly, which detailed property tax debts totaling approximately $119,000 on 25 of 30 pieces of property owned by Smith since 1993, Fort Worth’s tax collection law firm started foreclosure proceedings on his properties en masse.
Smith, who has advertised himself as a bail bondsman for years without the benefit of the required license, has long been a buyer of old houses, mostly in depressed Fort Worth neighborhoods. But until the Weekly found the slew of different company and individual names under which Smith was buying and selling property, tax attorney Elizabeth Parmer said, her office was not aware of the extent of his holdings.
A number of Smith’s houses were being sold under contracts for deed and listed on the tax rolls in the names of the buyers, masking Smith’s ownership even further.
“Now that we know just which properties are Mr. Smith’s,” Parmer said, “we’re putting them all up for auction on the [Tarrant County] courthouse steps.” The first batch will be ready for sale in about 75 days.
Parmer is an attorney with Perdue, Brackett, Flores, Utt and Burns, the law firm that contracts with Fort Worth and the Fort Worth school district to collect back taxes. County taxes are collected by the Linebarger, Heard law firm. A foreclosure by the city, however, forces collections for all the taxing entities, Parmer said.
The Smith case is far from the largest mass foreclosure on properties owned by an “I buy old houses” dealer here, tax office records show.
Martha and Scott Davidson, a mother and son real estate team, owe a grand total of $611,360 in unpaid taxes on 89 pieces of property. On 24 of those parcels, taxes, penalties, and interest — some dating back to 1993 — exceed the assessed property value. In 1998, Parmer initiated proceedings to auction all the properties, but the sale was halted when the Davidsons filed for bankruptcy, a tactic that only forestalls the inevitable, Parmer said. “We will in time collect the money.”
“We’re still fussin’ with ’em [the taxing entities] over just how much is owed,” said St. Clair Newbern III, attorney for the Davidsons. He blamed the Federal Deposit Insurance Corporation for some of his clients’ troubles — back taxes arrived with “quite a few houses” the two got through the FDIC some years ago, he said. When the bankruptcy judge rules on the disputed tax amount, the taxes will be paid in full, plus penalties and interest, he said. “My clients will do the right thing.”
Coming in third in the Kentucky Derby of old-home-buyer tax debtors is Simone Gonzales, who operates under at least 10 aliases, tax records show. She owes $54,360 in unpaid taxes on 40 pieces of low-income real estate, almost all on the North Side. Parmer has filed multiple lawsuits involving many of those properties. Gonzales could not be reached for comment.
These three dealers in this specialty market have more than unpaid back taxes in common. They all sell houses under contracts for deed, a much-abused practice under which the buyer accrues no equity until the note is completely paid off.
Such contracts are not evil in and of themselves, said local attorney Luis Galindo, who works closely with the Fort Worth Human Relations Commission on housing discrimination complaints. “Many people can’t buy any other way,” he said, including newly arrived immigrants who speak no English, single mothers, and others with poor — or no — credit history. “This is often the only route for people to become homeowners who would never have a chance otherwise.”
But because of the vulnerability of the buyers, the practice is “ripe for abuse,” he said. Unscrupulous sellers can kick people out for spurious reasons, take the property back, and resell it again and again.
Selling houses with no clear title and unpaid back taxes is common. Often the buyer won’t find out he’s been scammed until the tax office files suit for the back taxes. A non-English-speaking new homebuyer under a contract for deed with Tony Smith filed a complaint in June with the HRC over just such a situation, Galindo said. When the homebuyer went to the tax office to pay his property taxes, he found that someone else was shown as the real owner of the property.
“Smith had sold these folks a house even though he had no title,” Galindo said. Making matters worse, taxes had gone unpaid for years. “I’m looking at that case now,” the lawyer said.
Smith has not returned calls from the Weekly for comment.
Galindo is also working with other fair-housing advocates here who hope to put a stop to “such predatory practices” which he believes are widespread in Fort Worth. The group includes Vanessa Ruiz Boling, director of the city’s Human Relations Commission; David O’Brien, of Housing Opportunities for Fort Worth; a few volunteer lawyers; and representatives of Summit Bank.
Boling said the group has applied for a grant to conduct a comprehensive survey to find the extent of such contracts. It’s also critical to find out, she said, what methods the sellers use to target buyers in poor and minority neighborhoods. Then her group can tap into that network, Boling said, to get information to the people about their rights, warn them of the dangers of contracts for deed, and tell those victimized how to get help through the HRC.
Because the poor are more likely to be the targets of those who abuse contracts for deed, the practice falls under the “predatory lending” section of the Fair Housing Act, Boling said. Her office investigates complaints of housing abuses under the act as well as the city’s anti-discrimination ordinance. “But until Linwood, we had literally no complaints about contracts for deeds. ...We didn’t even know the practice existed here.”
Linwood is the low-income neighborhood near downtown Fort Worth that was almost wiped out by the 2000 tornado and suddenly made “contract for deed” a household phrase. Linwood residents were nearly all buying under contracts for deed. When disaster struck, they discovered that many of their landlords had either failed to pay insurance premiums or collected the insurance money without making the repairs.
No statewide law protected buyers from such abuses, prompting State Sen. Mike Moncrief of Fort Worth to quickly push a bill through the Texas Legislature that year implementing safeguards for buyers and imposing tough penalties on violators. Still, advocates for fair housing for the poor see a long road ahead before real reform kicks in.
“I wish I could tell you that Tony Smith is unique,” Galindo said, “and that once he’s exposed, such abuses will go away, but that’s not going to be the case here in Fort Worth, I’m afraid.”
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