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HomeNewsLocal newsReal Estate Snafus, Disputes, and Scams To Avoid

Real Estate Snafus, Disputes, and Scams To Avoid

Buying or renting a lovely slice of the Virgin Islands can be seductive. Real Estate experts warn, however, not to skip surveys, title searches, and other common-sense due diligence. (Photo by Mat Probasco)

It was Christmas Eve, 1998, when Chris Richardson and partner Ted arrived in St. Croix for their holiday vacation. A hotel reservation blunder, however, had them potentially sleeping in a manger. Luckily, one inn had one room left. They liked Sand Castle on the Beach so much they wound up buying the place.

After years of hotel ownership, Richardson is close to having control over all the property he thought he’d bought New Year’s Eve 2016, he said Thursday. It’s taken an act of legislation.

Back in 1990, he told a Senate committee in early September, a former hotel owner built a covered deck and hot tub that crossed the property line. Around 1993, the Jacuzzi was removed and replaced by a shed. In 2003 or 2004, the shed was converted into a hotel room.

The 1,482 square foot encroachment went unnoticed until 2022 when the property was surveyed for a mortgage refinance with Bank of St. Croix, Richardson said.

“These surveys revealed that unbeknownst to me, a small portion of our beachfront villas building, fence and deck, as well as a short stone wall on the side of road plot 129, was encroaching on land owned by the Government of the Virgin Islands,” he told the Committee on Budget, Appropriations, and Finance.

The committee unanimously approved leasing Richardson the sliver of land but it still had to be approved by more committees and the governor.

“We hadn’t had a reason to have a survey done until there was a reason to have one done,” Richardson said. “We did not have the guidance of a real estate agent. A bit naive, a bit excited, we don’t fault anyone. I don’t hold anyone but myself responsible.”

Such confusion can be avoided by getting a survey at the beginning of any land purchase, said Sanni Craft, managing broker at Sea Glass Properties.

A survey will show the true plot size and any potential encroachments on neighboring land. Sometimes they reveal where the Virgin Islands government has encroached onto the property in question. Corners get rounded over time and it’s not uncommon for a road to eat off several feet of private property.

Craft urged would-be buyers and sellers to use the resources available. Real estate agents know potential pitfalls in the business. Attorneys have a professional obligation to uphold the law. And the recorder of deeds, part of the Lt. Governor’s Office, has records on who owns what — so there need never be guesswork.

“That takes that load off the buyer,” she said. “Now you get someone who is an expert in what they do.”

Seeking historical permit filings and surveys, title searches, and legal second opinions are all advisable.

“If you are buying something that is a high-value item, you should do your research and you should work with an expert,” she said.

Even if a buyer or seller chose not to use a real estate agent, consulting with professionals can help avoid problems, Craft said. In the vast majority of cases, there is no problem — but not all cases.

In March, a St. Croix man accused an acquaintance of duping him out of $60,000 in a false real estate deal.

Michael John was interested in a property in Mount Pleasant, Frederiksted. He told the Virgin Islands Superior Court that, in July 2020, Sherrymae Barnes said she was the selling agent for the $200,750 parcel. A few days later, John gave Barnes $5,000, he said, and, in October, delivered $40,000 and signed a contract to purchase the land. In November, John told the court Barnes allegedly asked for another $10,000 and wanted $50,000 to convince the seller John was a serious buyer.

John said he turned over the additional $10,000 and awaited an amended contract outlining the payments to date. Instead, he said, Barnes asked for a $5,000 loan. From February 2021 to September of that year, Barnes allegedly dodged John’s request to repay the loan.

John told the court he was unable to reach Barnes at all from December 2021 to August 2022. In November, John learned Re/Max had been retained to sell the property — for $262,000 — and had no knowledge of Barnes acting as the agent.

“Plaintiff files this complaint to collect on a debt owed to him along with associated costs and fees; plus damages caused as a result Defendant’s failure to honor the Offer to Purchase, for committing fraud and misrepresentation resulting in Plaintiff loss of income, loss of financial investment, mental anguish,” John’s attorney, Ronald E. Russell, wrote the court March 13. Russell did not respond to repeated requests for comment on the case.

Barnes — who goes by Sherry Barnes — has denied duping John, saying she did not try to sell him property.

Although the court filing says Barnes was served a copy of the complaint March 13, Barnes denied knowledge of the suit.

“This is the first I’m hearing about that,” she said Sept. 5. “I obviously need a lawyer. This is all news to me.”

Barnes had owned Mahogany Realty in Christiansted. Although the company dissolved in February, a month before John’s suit, Barnes retains a real estate license and said she occasionally helps friends and friends-of-friends buy property, she said.

“Basically, now I’m going to secure a lawyer. I’m going to get a defamation if this is made public,” she said.

Re/Max successfully sold the Mount Pleasant property in early March for $240,000.

In 2015, Barnes, then known as Virgin Islands National Guard Major Sherrymae Morales, was convicted of 21 counts of wire fraud for billing employers for two 40-hour-a-week jobs at once.

According to evidence presented at trial, from 2010 until 2011, Morales was employed as a full-time employee with the National Guard on St. Croix. At the same, she held a full-time contract position with the Military Personnel Services Corporation, which provides employee support to the National Guard. Morales submitted time sheets to both for the same 40-hour workweeks over a period of 14 months.

Although both employers acknowledged she was an exemplary worker, she was found guilty at trial. She was sentenced to more than a year in prison and more than $45,000 reimbursement to the Guard. The Third Circuit Court of Appeals upheld the conviction but cut the sentence to time served — roughly six months.

Barnes had also worked as a realtor during her time with the National Guard, having registered Mahogany Realty LLC in 2003.

In a 2009 court filing, a Mahogany Realty client sued, claiming Morales had taken a $21,500 advance on commissions for sales that never actually happened. The suit was dismissed in 2014 with an unclear outcome.

Craft, at Sea Glass Properties, said she had never encountered the sort of real estate malfeasance John alleged of Barnes. She said a far more common scam involves phony vacation rentals: Someone posts a photo or video of a beautiful short-term rental at a great price online. A few emails later, the would-be renter sends a deposit and the would-be renter disappears forever with the money.

“People think they are getting an amazing deal. They send this deposit, of course, and they never hear from them again,” she said. “If it sounds too good to be true, it probably is.”

Back at Sand Castle on the Beach, Richardson is now preparing to sell. He’s had a great time, he said, learned a lot, and has become a vastly better businessman for the effort.

He and Ted had visited St. Croix every year between that 1998 Christmas and buying Sand Castle.

“We would sit on the beach and dream, just like everybody does. What would we change if we owned it? And then we did,” Richardson said. “We truly got to live our dream but now it’s time to move on to something else.”

This time, however, Richardson is using a real estate agent.

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