Couple Buys Exclusive San Francisco Street, Rich Residents Sue to Avoid Paying Rent to Park
This is one of those stories that is bound to provoke a range of emotions. It involves a homeowners’ association, rich and powerful property owners, real-estate speculators and parking. None of those first three are likely to engender sympathy but in this case you sort of have to root for the little guys, the speculators.
San Francisco has some of the most expensive real estate in the United States. Pacific Heights is one of the more exclusive neighborhoods in San Fran and Presidio Terrace, a gated, guarded, private street is one of the priciest locations in that area. It’s across the street from the private Presidio Golf & Concordia Club. Former Speaker of the U.S. House of Representatives Nancy Pelosi used to live on the circular street, as has Sen. Diane Feinstein. When one of the 35 mansions on Presidio Terrace go on the market, they fetch big money. There’s a house currently listed for $14.9 million dollars.
One would think that folks with that kind of money would stay on top of financial matters, but due to the homeowners’ association failing to pay $14 a year in property taxes for about three decades, the private road and other common areas on Presidio Terrace came up for sale at a tax auction a couple of years ago. Tina Lam and Michael Cheng of San Jose were looking over an online listing of parcels and saw an “odd property in a great location.” Sight-unseen they bid $90,000 for the land, outbidding 73 other potential buyers. They now own Presidio Terrace, the street, cul de sacs, easements, sidewalks and the traffic islands filled with palm trees and other plants.
Earlier this year, a representative of Lam and Cheng, who works as an engineer in Silicon Valley, contacted homeowners to see if they were interested in buying the street. Apparently that offer was rebuffed and now Lam and Cheng are looking at other ways to recoup their investment, including charging rent or condo fees for the 120 parking spaces on the street.
I don’t know about you, but there is something absolutely delicious about people who live in a gated community complaining about having to pay to park in front of their homes. The idea that they might have to put up with people who don’t live in their gated community renting parking spaces (in parking-scarce SF) there brings out the Al Czervik in me.
Since they are powerful, the homeowners’ association has petitioned the city’s tax office board of supervisors for a hearing, seeking to rescind the tax sale, claiming that the city sent the tax bills to the wrong address of their former accounting firm and failed to notify homeowners of the impending tax sale. Since they are rich, the homeowners have also filed suit against Lam and Cheng, alleging that they deliberately didn’t contact the HOA for two years, just to make it harder to rescind the tax sale. For their part, the city of San Francisco puts the onus on the HOA.
There are 181 private streets in San Francisco. “Ninety-nine percent of property owners in San Francisco know what they need to do, and they pay their taxes on time — and they keep their mailing address up to date,” a spokesperson for the city’s treasurer and tax collector told the San Francisco Chronicle. “There is nothing that our office can do [about the sale],” she added. She also said that as far as she knew the San Francisco Board of Supervisors “has never done a hearing of rescission.”
“As legal owners of this property, we have a lot of options,” Cheng said, adding that nothing has been decided yet. I have an idea. The street is adjacent to Congregation Emanu-El, a reform synagogue, and the high holidays are approaching, the busiest time of the year for Jewish congregations. Perhaps Lam and Cheng can contract to provide valet or overflow parking for the temple for their holiday religious services.
Ironically, Cheng is ethnically Han Chinese, an immigrant from Taiwan. He and Lam may own Presidio Terrace but for the first half of the 20th century, he wouldn’t have been able to have purchased a home there. Before the U.S. Supreme Court ruled such covenants to be unlawful in 1948, the Presidio Terrace Association “restricted” the sale of homes and Asians weren’t allowed.
Image Sources: Malin Goodings Real Estate, Google Maps
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Another outcome is the court blocks the buyers from doing anything that interferes with the residents use of the street equal to what they currently have, which includes driving and parking on the street anywhere in the development. The Buyers would still own it but would likely walk away from the property and not pay taxes, losing $90K in their gamble. If the buyers walked and HOA started paying the taxes, after a few years (seven?) the HOA could sue and get the title changed to the HOA. Current buyers would be SOL. My guess is the buyers, now owning the street, may have been thinking about going house-to-house to offer access/easement rights to their now land-locked property for $50K or so. Title insurance would very likely cover it so what's to lose? (The City could unwind the deal, pay the buyers back their $90K, and give the residents title in exchange for the back taxes. However, Cities are loathe to give back money. Judges are loathe to make Cities give back money.)
A feel good story for troubled times. I hope they screw with them endlessly.