After the Fall

Yesterday I had a free consultation with three young musicians that had worked and saved to move into their dream house, only to lose it. It was in a good location in North Hollywood with big rooms for rehearsing that could hold all their equipment and they were thrilled to get a lease-to-own contract that got around their low credit scores. The problem was they gave their money to someone that didn’t actually own the house.

The warning signs were there, but they didn’t see them, being blinded by the house they wanted so badly. The expensive fixtures were missing and hadn’t been replaced by cheaper ones. They met the “owner” on Craigslist and he was in a hurry; he had a contract ready in his briefcase, and he demanded cash the same day they saw the house.

It was a week before an angry real estate agent showed up to tell them they were squatters. This was the week they spent falling more in love with the house and putting another few thousand into repairing its problems. The hot-tempered Iranian real estate agent threatened to change the locks on the door.

Before I saw them they’d been to a bunch of attorneys and paralegals. The attorneys asked for money and made promises; the paralegal told them to file bankruptcy even though they had no debt. When I looked across the conference room table I could see the three of them were confused, angry, and suspicious.

With all prospective clients, I spend the first few minutes (sometimes longer) adjusting expectations in line with the law and reality. Some clients are grateful for brutal honesty and some want to run into the arms of the next liar. The truth, in this case, was that they could sue the snake oil salesman for damages and probably win a money judgment and eventually collect. The brutal part of the truth was that they would eventually have to leave the house.

In real property litigation, there are two distinct rights; there are damages which you can get for the wrongs that are done to you, and there is the right of possession which you may or may not be entitled to. This case points up those two rights perfectly because the conflicts were not only different but with two different parties. The three musicians had a good case for damages against the snake oil salesman because he did something wrong to them. The dispute over possession would be between them and the new owner who hadn’t done anything wrong and was entitled to take back possession.

The truth was hard for these young people to hear, but I saw their demeanor change as they adjusted to reality. They would hire me to negotiate with the current owner to pay them for their improvements. They would bank the money they were saving by not paying rent for a few months but leave before they were evicted. They would come back to me in a few months to talk about litigation.

As we were leaving the female member of the band asked me how they could avoid a mistake like this in the future. I told her that when something seems too good to be true it probably is and those successful people were not afraid of lawyers. I told her that the next time she should bring me the contract before they signed it and before they gave anyone any money.