Monday, July 28, 2008

The First Report

Gainful employment has rendered me able to get back digging through my developer’s court records.

Funny how not worrying about money frees you to pursue other interests.

And as you all know, Mr. Knight’s legal predicaments happens to be one of mine.

In an earlier post, I detailed the initial paperwork of the lawsuit filed by Inland Bank and Trust against Carlton Knight for $1,120,000.

At the time I first viewed the court papers in December of last year, Mr. Knight had fought the lender’s attempt to have the property put into receivership.

For those of you who aren’t familiar with receivership it’s when “a creditor can enforce security against a company's assets in an effort to obtain repayment of the secured debt.”

In other words a receiver “distributes the proceeds to creditors and can also complete the administration of the estate.”

Or at least that’s what Wikipedia says.

According to papers obtained from the Clerk of the Circuit Court of Cook County that’s exactly what happened.

The first receiver’s report reads like a primer for mismanaging a rental property. Out of 40 units the receiver said that 14 units were “nearly uninhabitable,” 7 were in “inhabitable but in poor condition” and 20 are in “reasonable condition.”

Oh yeah, if the number 14 + 7 + 20 don’t equal 40 it’s because one of the units was used as an onsite property management office.

The report further states that “poor conditions stem mostly from damaged seals along windows/doors that allowed water to get under the tile and carpet and mold in the walls, damaged/broken appliances, damaged cabinets, broken sinks, etc.”

I wonder if this is the “hands on, proactive management philosophy” that Mr. Knight espouses on his website?”

Again the report states that 20 of the 41 units are unoccupied and that the vacant units are “frequently vandalized and the doors are kicked in.”


“It appears that the portions of the structural features (masonry, walls, parking areas, etc.) are in fair condition while other features, such as roofs, exterior decks and stairs on the 15144 building are in poor to very poor condition Additional items needing attention include boarded up windows/patio doors, broken doors/locks, heaters, backed up sewers, missing smoke and carbon monoxide detectors, security cameras, thermostats and other items. “

Broken heaters? Backed up sewers? Missing smoke and carbon monoxide detectors?

Those seem like slum conditions to me.

I’m also curious to know why a lender would make such a substantial loan on a property in poor condition. I doubt that a property could have gone so far south in only four years.

Doesn’t anyone do their homework before handing out over a million dollars?

Then of course I apparently I didn’t do mine before I signed on the dotted line so there you go.

“Preliminary estimates for building repairs amount to $175,000 - $210,000 with a majority of the costs for the roofs and stairs/decks.”

Well that’s what the report says according to the court papers. Don’t act like I just went out and made this stuff up.

But wait there’s more---at the time of the report the first installment of the 2006 property taxes had not been paid.

“The current amount due for all of the 2006 real estate taxes including penalties associated with the 1st installment is $49,567.96.”

So let’s sum it up----half the units are unoccupied, the property was (is?) in severe disrepair and the property taxes for 2006 were overdue.

Do not make me share the samplings of the tenant maintenance surveys.

I can sum it up in one word---chilling.

1 comment:

Darius T. Williams said...

Yea, so - I think chilling is definitely an understatement here.