The San Francisco Chronicle is reporting that a couple recently purchased the street of an exclusive enclave in a tax auction. Yes, you read that right. They bought the street. It’s a private road in the center of a gated home owner’s association with multi-million dollar homes right next to the Presidio. It’s not clear what the couple hopes to achieve with the purchase, but a similar situation in Georgetown could hint that they’ll end up disappointed.
As you may remember, two years ago Kebreab Zere, having acquired ownership of the lots that made up the alleyway between Potomac and 33rd, south of O St., moved to block residents’ access to the garages on the alleyway. He had acquired the lots through tax auctions over the course of several years. Having obtained all of them, he requested permission to put up a fence at the end of the alley. It was an obvious shakedown.
Unfortunately it was a case of bringing a water pistol to a tank battle. Not only would the historic preservation laws prevent a fence from going up, the obvious fact that the residents held an easement over his newly purchased property would prevent him from taking any steps to limit their access. And the residents on this street were not likely to fall for this penny ante extortion.
Coincidentally, just last month the DC Superior Court issued a decision granting the residents a summary judgment in their favor against Zere. The court found that there was no doubt that a prescriptive easement existed over the alley, and that Zere was obligated to comply with it. (Quick legal lesson: an easement is a right to use someone else’s property. A prescriptive easement is an easement that, essentially, emerges from continuous use of someone else’s property. It’s a bit like adverse possession, but doesn’t convey ownership, just the right to use the land.)
The San Francisco situation is unlikely to resolve exactly like the Georgetown one. The purchasers of the road bought the land from a tax auction over tax bills owed by the home owner association itself. But they are likely to be greatly disappointed if they think they’ll be able to do anything profitable with the road. It is likely subject to restrictions contained in the home owner association’s by-laws. But either way, the legal firepower available to the home owner’s association will likely blow away any attempt to milk this for a profit.
There are a couple lessons in both these stories. The first is that you should pay your taxes and keep good paper work. In Georgetown and in San Francisco, it appears an oversight spread out over decades meant that a nominal tax wasn’t getting paid. Second, you shouldn’t expect that snapping up these properties will lead to riches. There’s a reason the tax bills were so low on these lots. They’re essentially worthless.