Real Estate Reform Plan Pushed to Prevent Fraud

Real estate reforms are under consideration for Los Angeles County that would provide land buyers with new rights, force sellers to disclose more and require government to play a new, aggressive role in policing land fraud.

Inspired by the Marshall Redman case, the proposals would ad muscle to existing consumer protections and, if approved by the Board of Supervisors, would catapult the county into the forefront of the effort to counter deceptive advertising and sales tactics by unscrupulous developers.

Consumer groups and a powerful state legislator are applauding the county’s response to alleged abuses by Redman, 68, who faces a fraud trial in connection with the sale of desert land to more than 1,500 Latinos. A task force created by supervisors is compiling a report on the potential reforms to be completed in December.

“They’re very good ideas that would provide a lot of consumer protections not already in place in California--changes that are very necessary,” said Norma Paz Garcia, an attorney for the Consumers Union, a San Francisco-based nonprofit public interest group that has researched land fraud in California.

Assembly Minority Leader Richard Katz (D-Sylmar) said the county’s package of legislation could become a statewide model.

“It sounds like these are the kinds of measures that might have prevented this fraud from happening in the first place,” said Katz, who will retire at the end of his present term. “It makes sense--if they work in Los Angeles County, they can work in other counties in the state.”

But some who represent California’s real estate business are less enthusiastic.

“People often throw legislation at an issue out of desperation,” said Craig Page, legislative counsel for the Sacramento-based California Land Title Assn.

“Sometimes measures don’t address the problem, but by passing them, people still feel like they’ve done something. My concern is that they’re casting a broad net that affects everyone but misses the very people they’re trying to catch--people who won’t follow any laws.”

Between 1978 and 1994, Redman sold undeveloped Antelope Valley land to blue-collar buyers, using ads in the Spanish-language media. What many bought were near-worthless parcels they could neither resell nor build upon--land which in some cases wasn’t even Redman’s to sell.

The task force, which has reviewed laws from across the nation, has drafted an ordinance that would arm buyers with “means to make intelligent and informed choices and help protect such buyers from inaccurate, misleading or deceptive statements or actions” by sellers.

In the city of Los Angeles, the council last month toughened consumer protections for land purchasers, citing the Redman case.

Other provisions under consideration by the county:

* Requiring developers to meet “truth requirements” when dealing with both buyers and advertising outlets such as television and radio stations.

Developers would be required to supply advertisers with disclosures verifying, among other things, that the land is theirs to sell. Officials say the legislation would be like that requiring used-car dealers to prove that vehicles in television ads are actually on the lot.

* Requiring land sellers to produce certification for buyers proving the presence of such things as road access, or disclosing such costly services as electricity and water that have not been provided. For the missing services, sellers would be required to give estimates of the cost, which in remote areas can run as high as $50,000 for electricity alone.

Such provisions would bury the county under an avalanche of paperwork, according to Calabasas resident Paul Kahn, who spoke at a recent task force meeting.

“To require every land sale to be accompanied by a certificate of compliance--do you know what kind of mayhem you people are wishing on yourselves?” asked Kahn. “Right now, the county has exactly two people to handle these kinds of certificates. You’re going to be besieged with paperwork. And the delays to honest land sellers will be outrageous.”

* A requirement that contracts for the sale of land, along with deeds, be filed with the county recorder.

Redman made a majority of his sales by long-term contracts. With no requirement for recording, or public disclosure, of such transactions, it took authorities years to catch up with Redman’s alleged fraud because no one but Redman and the buyer knew of the sale.

No such requirement exists anywhere in the United States, and critics on the task force said it would be too costly to enforce and would be ineffective against swindlers, who could simply ignore it.

* The county Department of Consumer Affairs would act as a clearinghouse for tips and information regarding real estate fraud--becoming the main contact point for the public as well as coordinator for action by local government.

* The county task force, made up of public and private real estate experts and law enforcement officials, has developed a consumer tip sheet with several common warning signs of land fraud to be given to buyers who contact public agencies about such fraud.

At the task force meeting, Page questioned whether the educational measures were too little too late. “Shouldn’t there be more effort to reach people before they buy land?” he asked.

Tim Bissell, chief investigator for the county’s Department of Consumer Affairs, acknowledged the agency has circulated dozens of similar tip sheets warning of fraud.

“It seems the only time people take heed is when they themselves become victims,” he told the task force. “Until then, they don’t listen.”

In response to Page’s concerns, board members said they would attempt to devise a program to reach minority buyers through church and neighborhood groups--and even at local lumber and hardware stores--to call attention to the problem before buyers fall prey to swindles.

Los Angeles real estate lawyer Robert I. McMurry, a task force advisory member, said local government finally has to take its share of responsibility for the Redman mess.

“Government doesn’t fix the intersection until somebody gets killed--and it isn’t fixing the present real estate laws until at least 1,500 people apparently got defrauded,” he said. “It’s a shame we have to wait for dead bodies. But now that that we’ve got them, let’s recognize them. Let’s do something.”