“The attorney general for the city is looking into whether criminal charges should be brought against the developer for selling parking spots”

developer parking
Photo by PoPville flickr user Wayan Vota

“Dear PoPville,

Your Vault or Mine?

I am part of a group of condo owners in a condominium developed in 2012 in DC. The developer of this new building sold us a parking space, with a separate deed, along with our condo unit. We have all been paying taxes on both the condo unit and the parking space since purchase.

In 2016, the condo developer finally got around to filing the “plat and plans” with the city government. It is at this time that the city found a discrepancy with the “plat and plans” given to us at closing and the actual survey of the land underground wherein the parking spots sit. The discrepancy suggested that the city actually owns the land under these parking spots and they lie in what is known as “vault space.” The city now wants to take away our deed to the parking space and, instead of taxing us, rent us the space. There is obvious loss of value to any condo owner who bought one of these parking spaces.

The city government has wanted to enforce its interest in these “vault spaces” after a law was passed in 2015 by the city counsel. This is an obvious money maker for the city who has hardly ever enforced the city ownership on these vault spaces in the past.

A claim letter mailed to our title company proved useless because there was a handy clause that excluded them from doing anything about this. The attorney general for the city is looking into whether criminal charges should be brought against the developer for selling parking spots with what appears to be inaccurate plat and plans. Our only recourse now left for the owners is to try and legally petition the city to help us right this wrong. We need a very good real estate attorney that knows how to work with the city government and preferably has experience with vault spaces. My suspicion is that this will fast become an important issue now that the city government knows that money can be generated renting these vault spaces to home owners across the city.

PoPville: have you been in a similar situation or do you know of a qualified attorney who can help us navigate this?””

32 Comment

  • Sue the developer for misrepresentation/fraud.

    • yea, it sounds like the developer sold land he never owned to begin with.

      from what i understand, a “vault space” is a space underground that extends beyond the developers property and into public property. So, it sounds like the developer never owned this land, but presented it to you as owning it.

      • Exactly.
        And title insurance should help protect against this sort of fraud.

        • A vault should have been identified as an exception under the title policy. A lender’s policy has more protection than an owner’s policy and typically contains a clause that the existence of the exception will not result in the forfeiture of reversion of the property. If there is a loan, it’s possible the lender has a claim even though the owner does not. This of course assumes the parking space was also subject to a deed of trust securing the loan.

    • Agreed. If the developer sold you property that it did not own, your first recourse should be against that developer. Whether the City rarely enforced its ownership of these spaces in the past is irrelevant if it actually does own the spaces. Let the developer fight the global battle with the City over this practice. At the very least, you should be getting the money you paid for the spaces back.

  • Didn’t you get title insurance? I assume that you can make a claim and be partially made whole.

    • Did you not read the article? “A claim letter mailed to our title company proved useless because there was a handy clause that excluded them from doing anything about this.”

      • I am curious as to what clause exempted them from doing anything. This sort of thing is literally the only reason that title insurance exists. If it doesn’t cover getting titled a property that someone else has claim to, then it is a useless product. I’m just curious for the next time I buy so I know what clauses to look for and the justification the title company used for not covering this.

        • Ditto. OP probably should have had an attorney go over all the paper work before closing. The closing attorney is supposed to explain everything including the loopholes, but the people who perform this role seem much more marginal and pro forma than what I experienced when I first bought in the 90s (I’ve financed and refinanced multiple times since then).

          It’s unclear to me what the District’s liability should be, but they clearly have no obligation to pay for the spaces and OP really should be looking for a way to pursue action against the developer. In a market like the current one, i would assume that the developer is a corner cutter if not a crook and act accordingly.

          • Developer is probably a now-folded LLC. But it at least sounds like the city has some way to pierce the veil, so perhaps there’s a snowball’s chance they get to court. Recovery is a whole different ballgame.

    • Title insurance is a joke. We filed a claim with ours over a very serious issue and it fell within an excemption. My friend filed one with his regarding something the title attorney missed (and later admitted to missing) during the title search. His claim also fell within a title insurance exception. According to our attorney it is hard, if not impossible, to get money out of your title insurance.

      • Who would have ever thought that an insurance company would try to avoid a payout…

  • Why is the OP acting like the District is being shady? If it’s the city’s land, and the condo owners didn’t verify their ability to buy it from the developer, why wouldn’t the city be entitled to take it back (and the owners to sue the developer)? Also, what title company would insure a deed without determining the lawful owner of the property (and what “handy clause” is preventing the city from dealing with them? That sounds like the developer/condo owners were colluding to deprive the city of its property.).

  • Looks like Wilkes Artis has some dealings with this type of thing – http://www.wilkesartis.com/wp-content/uploads/1111Penn.pdf

    • The cited case appears to involve a dispute over the amount of rent that should be charged for legitimately leased vault space. The developers/lessors did the right thing – i.e., paid the City for the vault space pursuant to a contractual agreement. Whereas the OP’s case involves a developer who appears to have sold vault space id did not own to a third party.

  • We had this issue in our condo, but luckily not affecting all parking spaces. It’s a huge mess and I don’t think it’s all completely worked out. (It’s been over 10 years). The city now charges the condo association an annual vault fee or tax, which gets passed on to all condo owners, and I believe the people that “bought” the vault spots are not paying property taxes on them. Since I don’t have one of the spots in the vault, there are no title issues with my spot, but those that did “buy” the vault spots are probably still working this out with the tax office. If your condo has settled all transition issues with the developer and released them from their bond, you may be out of luck, but you definitely should work through your Association’s legal counsel.

    • If not everyone owns a spot you may want your own counsel in addition to the Association’s counsel. Keep in mind that the Association’s counsel represents the Association, whose interests may not always be aligned with your own (especially if the affected owners are in the minority).

  • Woof…tough spot.

    Everyone shares responsibility. The developer for your condos for taking so long to finalize the plats with DC.

    DC for charging property tax on a piece of property that wasn’t technically finalized (have no idea how they did that) that gives creedence to the ownership slant.

    To be honest, I would demand the money back from the developer for the cost of the parking spot. They charged you for something that wasn’t theirs to sell.

    You will never gain fee simple ownership over it so don’t waste your time. Best case scenario is get your money back and rent the spot if you want,

  • I am surprised you were able to close before the Plats and Plans were filed with the Office of the Surveyor, for a variety of reasons. Not only is it against code, but filing the Plats and Plans is what allows the Office of Tax and Revenue to issue ‘condominium tax lots’ that correlate with your Unit, the parking space unit, etc.

    I am not sure how you purchased a ‘Parking Unit’ that doesn’t have its own tax lot. Not only would that deed be un-recordable, but a title company would not issue insurance on it. I think we may be missing some facts…

    • THIS. There is something missing to this story. Without plats and plans having been filed at the Surveyor’s Office, the tax office will not subdivide the lot and issue separate lot numbers for the residential and parking units, so something doesn’t make sense as it would be physically impossible to purchase your unit without that lot number.

  • Looks like Adverse possession law is 15 years in DC…but I wonder if there is some other type of law you could invoke since you’ve been paying taxes on the property all this time.

    • It’s been decades since I studied real property, but I am still 99% sure you can’t adversely possess public land.

    • Adverse possession does not run against government property.

    • Adverse possession doesn’t work against the government, so put that out of your mind. You will probably have to sue the developer to get your money back and then just rent the spot from the city. Franklin and anon 2:37 seem to have the best advice.

  • please let us know what provision of the title policy you are referring to. was it the “what an accurate survey would show” provision?

  • The way the request is being framed, I take it that the “wrong” the OP thinks needs to be addressed is the City taking away value from the putative “owners” of these parking spaces. Instead of a property interest that can be sold or transferred they will now have nothing more than a leasehold. But the owners of these spaces never owned the spaces in the first place. The developer could not transfer an ownership interest it did not have. Maybe the owners can engage a lawyer to petition the City to refund the 4 years worth of property taxes these folks paid the Citry (though they might be able to do this on their own). But I don’t see any successful legal action where they get ownership of public land just because a developer represented that it had the right to sell them that land when in fact it had no such right.

  • Aglets

    What? I don’t understand this at all. Can someone dumb this down for me?

    • In a nutshell, a vault is defined as a publicly owned structure or an enclosure of space beneath the surface of public space which abuts privately owned land. Think of it as the space under your neighbor’s property where your neighbor is the DC government.
      In this case, a condo developer created a parking area for a condo development in vault space – under land that belongs to the DC government. The developer then sold these parking spaces to condo owners. The DC government is now saying that the condo owners who bought these spaces do not own them because the developer never owned them (the property belongs to the DC government) and therefore had no right or ability to sell them to anyone else. But the City is saying these folks who “bought” the spaces can now rent them from the City.
      It’s not uncommon for private parties to lease vault space from the city as a place to put utilities, parking, whatever. The lawsuit in the link provided above relates to a lease of vault space. But you can’t just appropriate it for private use. And you certainly can’t sell it to someone else.

  • My compliments to all the commentoors. There seems to be real knowledge here and no snarkiness.

  • Brian Thompson and Art Konopka are the best real estate attorneys in the city for this specific area of law. I have used them and have been very pleased with them. I strongly urge you to reach out… today! Here is Brian Thompson’s contact information:

    Brian W. Thompson
    JACKSON & CAMPBELL, P.C.
    1120 20th Street, N.W.
    Suite 300 South
    Washington, D.C. 20036
    (202) 457-1648
    (202) 457-1678 (fax)
    [email protected] [BWThompson (at)
    http://www.jackscamp.com

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