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Lien LESSONS

Investors convince Fernandina Beach to clear $56K of liens on property

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For nearly three months last year, a pair of real estate investors called, emailed, and met with various Fernandina Beach officials, including the City Attorney, City Manager, and Code Enforcement & Appeals Board, with a significant financial concern. They had purchased a vacant residential lot near the downtown historic district in a tax deed sale for $5,100, believing it was worth perhaps as much as $25,000. But soon after the real estate transaction closed and the parcel became theirs, the investors learned the city had a series of longstanding liens on the land for code enforcement issues, unpaid utilities, asbestos abatement, a structural engineering report, and a house demolition. According to city records released by the clerk's office, the bill totaled $70,682.

The investors wanted to know: What could the city do to reduce or eliminate the liens? Without relief, Orlando Avila, a shipping agent who is running for the Fernandina City Commission in the Nov. 7 election, and his business partner Todd Ericksen, a realtor, maintained they would not be able to make money on 501 S. 10th St.

"With an investment in any property you intend to make money," said Avila at the May 16, 2016 special hearing of the Code Enforcement & Appeals Board, according to meeting notes. With the "sizeable lien," he maintained, there would be "no equity left."

As it turned out, the city could-and did-make the liens evaporate within four months of the March 15, 2016 purchase.

City Attorney Bach clarified the news for Ericksen in a July 7 email that year.

"You have already met with the Code Enforcement Board, and they reduced the fines from over $70,000 to a little less than $15,000 which includes the costs incurred by the City for demolition of the structure and asbestos remediation. The other City liens included utilities liens which the City Manager has agreed to release. I am preparing the release of lien for the utilities which will be emailed to you when it is filed. The partial release of lien for the code enforcement liens was recorded a couple of weeks ago," she wrote.

The business partners, who claimed the city failed to file certified records of the liens with the Nassau Clerk's office (true, according to Bach, who said by phone last week that she has since taken over filing responsibilities from Code Enforcement), scored a big victory at the hearing when members unanimously agreed to release about $56,000 in fees and fines.

Benjamin Morrison, who served as board chair for the hearing and now serves on the Planning Advisory Board, expressed appreciation to Avila and Ericksen and "people like them" who are making investments in the community to "improve the quality of the neighborhood."

The parcel is located less than a half-mile from the downtown business district in a residential neighborhood largely filled with modest, older homes, though new residential construction is increasingly popping up. Avila and Ericksen thought it was a smart investment.

They told the Code Enforcement Board they had been turning to tax deed sales to invest in local real estate and pursued the property when it was announced to be for sale. Avila said, according to the clerk's meeting notes, they didn't find much information in "cursory searches" of official records. Had they called the city building or code enforcement departments, they would have found a trail of documents dating to 2012, which spoke of a rat-infested house being used by vagrants before it was demolished last year to protect public health and safety. In documents, the city said the property was in probate, having been abandoned by heirs and administrators they couldn't locate. Officials referred to the property as the "Cora Byrd Estate."

While the business partners managed to quickly erase the liens, according to county records, they were not able to not sell or develop the property for profit as anticipated. Instead they essentially walked away from their investment.

Documents filed with the Nassau County Clerk's office say Avila and Ericksen transferred their property by Quit Claim deed in September 2016, six months after the purchase, to Daniel D. Sturges and David K. Sturges for $10 "and/or other good and valuable considerations." The documentary tax stamp, which is calculated at 70 cents per $100 of the property transfer value, is listed as 70 cents. Had Avila and his partner received their purchase price-$5,100-the stamp would have been $3.57.

It is a small dollar amount, either way. But the stamp, as signed by Avila and Ericksen, reflects a worthless transaction.

County records show that the Sturgeses made money on the deal. After holding the property for about six months, they sold it in April for $38,200, a tidy profit for a $10 investment. The Nassau Property Appraiser puts the assessed value of the lot at $27,245.

According to the state Department of Revenue, the exchange of property for money and goods of value must be reported and appropriately taxed. Was the stamp on Avila's and Ericksen's transaction properly recorded? Avila said by email in late October, "I didn't get any special favors of treatment from anyone in the City Manager's Office. All investments carry risks. We learned a valuable lesson and moved on." He did not respond to further requests for comment and refused an interview after an Oct. 19 Candidates Forum.

Avila is connected to a many top officials across the county. His mother-in-law is Nassau School Board President Donna Martin and his father-in-law John Martin, who runs a veteran's program. Each donated $500 to his campaign. State Senator Aaron Bean sent Avila $1,000 through the Florida Conservative Alliance, the political committee he chairs.

Ericksen, who was reached in person at a local restaurant where he tends bar, also mentioned "learning a valuable lesson," but refused to elaborate or discuss the tax stamp.

The Sturgeses did not respond to several phone requests for comment. Avila's campaign finance report filed with the Nassau Supervisor of Elections show the family's development company Sturges & Sturges donated $50 to Avila's campaign.

Today the lot at the intersection of S. 10th St. and Elm St. is in the same condition today as it was when Avila and Ericksen purchased the property: weedy and vacant.

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