Herron family home trashed after mortgagee sale
The family home of bankrupt Merlot Homes director Stuart Herron, which recently sold at mortgagee auction, was completely trashed before the new owners could move in.
The Devonport property was purchased by Jay and Moira Taylor-Innes, who have three small children.
In the four weeks between the auction hammer falling and their moving in date, the house was torn to shreds.
Mr Taylor-Innes said the damage included:
>> 10 architraves (the wood around doors) ripped off the walls
>> carpet, light fittings, oven and hob removed
>> an entire upstairs deck ripped out, including wooden planking and the steel substructure underneath
>> carved “X” marks into the living room floor
>> two trees drilled with holes and poisoned with Round Up.
An electrician deemed the house unsafe due to damage to the wiring and, although the planking of the downstairs deck was not taken away, about 2000 screws holding it down were removed.
Even the showerhead and toilet roll holder were taken from the master bathroom.
“When you buy a house at mortgagee sale, you work in a factor because you know that there’s a potential for this,” said Mr Taylor-Innes.
“But when that risk materialises, it’s not just the financial costs, it’s the emotional and mental and physical strain.
“Even now we’re not fully sorted out, a month later.
"The damage has cost tens of thousands of dollars to repair, and “the chequebook’s still open”.
Merlot, which collapsed last year, was a major player in the residential property investment market. Mr Herron was a director and shareholder.
His wife Christine now owns and directs a company called Lakov, which in turn owned the home on Devonport’s Rutland Road.
The vandalised home was built for the couple as a family home. It has a rateable value of $1.25 million.
Mr Taylor-Innes, a naval officer, said it had been a long-time dream to own a property in Devonport.
“We did nothing wrong here,” he said.
He would not buy another home at mortgagee auction.
The sale and purchase agreements at mortgagee auctions typically do not cover the chattels.
The Taylor-Innes’s asked to inspect the house before settling, on the recommendation of their solicitor, but were told it wasn’t possible.
Mr and Mrs Herron’s property was sold by Harcourts at the behest of mortgagee Westpac.
The listing photos of the house can be seen here, but here is a couple of examples of 'before' shots:
Below are a selection of 'after' photos taken by Jay and Moira Taylor-Innes after taking possession of the house:
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Comments and questions49
Subbies taking what they should is one thing - though why not buildin a process where the new owner ahd the option to pay put subbies? As for "Karma" - nothing of the sort really exists - actually bad form on the part of some people when they have to quit what they could not have afforded.
That is a very well explained outline of the situation. While I was initially feeling support for the buyers, that has turned now. According to another article I read on this, the buyers were offered all chattels and fixtures in a separate contract for $15,000. Being that this was for goods to the value of $30,000 - this was a bargain too. The buyer turned the offer down. I feel that, now that I have read the explanation @ 12.25pm and heard that they were offered them for a bargain but turned them down, the new owner got what they asked for. As for the X's on the floor - at face value they appear to be vandalism, however we do not know much more than thatstatement - they could be location marks lightly put on the floor below the carpets BEFORE during the building process which were only revealed once the carpet was removed. It makes you think - there normally are two sides to every story.
Dear anonymous real estate agent, I'm sure the rest of the real estate agents in Auckland must be running for cover with remarks like that. Why don't you let us all know which office you work out of, you are so in touch with the market...
OMG! unbelievable! what rotten hearts the previous owner had!
Did they not get insurance at the fall of the hammer like everyone is told to do ?
Surely the neighbours would of heard banging and all sorts going on next door. Is this legal? Where will all the items turn up? Trademe? I'm off to have a look.
I would suspect this recovery of fittings and materials would be by some of the suppliers and contractors owed a lot of money by the previous owner/developer
Hmmmm ....... all a bit dodgy. The fact that an X was carved into the floor indicates some sort of Malice, which i imagine the Owners were responsible for. There is however a 'duty of care' that the mortgagee will do all that they can to mitigate this type of occurence.
'Caveat Emptor' perhaps?
Landlords beware if you come across a Stuart Heron as a potential tennant...because he'll be surely looking for a place to rent.
After 5 years, nobody will remember who is bankrupt Merlot Homes director Stuart Herron unless there is a better NZ system in place.
You generally can't get insurance on a mortgagee sale that covers malicious damage by the occupier. It's a much riskier proposition than most people realise.
Its easy to be wise after the ship has grounded but I suggest the buyers' solicitors were totally remiss in allowing settlement to proceed without the prior inspection.
this is truly shocking behaviour. Shame on who-ever did this.
People who cannot count and therefore lend or take on more debt than can be repaid, generally blame everyone but themselves. Shame on the Heron family. Look out for them, they will no doubt be looking to borrow again.
I feel very sorry for the new owner, but it is a very real risk when buying mortgagee property. My view - arrange to settle with vacant poseesion on the auction day. Make it the lender & selling agents problem not yours. With nearly three pages of mortgagee auctions in the paper last week it is clear there are going to be many spiteful debtors out there.
I do not feel sorry for them or the lenders, they are part of a group that is behind the sub prime lending that set off the world wide collapse of the banking sector which followed into this very deep recession.
In reply to 'mortgagee sale' : You have to settle. All the usual warranties are taken out of the normal Sale & Purchase contract.
So the vendor (the mortgagee) doesn't warrant that the place will have any chattels in it, or be in a good state or even vacant when you settle.
So as the purchaser you buy knowing all of this in advance and take your chances. Normally people just go, leaving behind some rubbish etc. But every now and then they barricade themselves in or trash the place.
This is not surprising the way Merlot and its directors "Ran" this company. They should all be in jail.
Thank you Arthur Murray for your comment re settlement and possession on the day of auction. I personally never attend house auctions, just cannot envisage buying such an important asset in that type of atmosphere but this is very useful advice should it ever come to that.
I can well imagine though how angry unpaid subbies are: they have done the work and supplied the kit and then get left high and dry by wideboys like the Heron bloke.
Its actually well-known in the Realestate industry that properties sold via mortgagee auctions are often trashed prior to settlement.
They should never have settled without an inspection, and additionally asked for security guards between the auction and settlement dates
Sure, auctions sales are meant to be free of conditions, but this is just rediculous.
The Realestate industry need to sort this sh*t out and allow the winners of mortgagee auctions to contract in more conditions of sale.
As a real estate person I need to poiint out that the conditions of the sale are entirely controlled by the Bank and not the agent. Don't blame the agent.
My records show that these people paid 40% less than the last recorded sale. They seem to have forgotten that they were trading on other people's misfortune and got precisely what they deserved. It's called Karma
This certainly puts a new spin on the cut and run brigade. The guy is dodgy and should be locked up like others have suggested.
People who have a vocabulary that is so limited that they have to use the term "dodgy" should also be locked up and made to read more widely.
Each home is a castle into which the King's writ does not seek to run nor do his officers seek to be admitted - relevence ? Naught !
However , allocation of blame below to real estate agents , bankers , lawyers , subbies , insurers , etc somehat delusional I would have thought - kinda like " oh , your artery is severed - here is a band -aid " . Perhaps this sort of conduct is just what we need to get the construction industry moving again ?
To another 5,000 mortgagee sales in the winter of discontent then !
Dodgey, dodgery, dodgeridoo,
Anonymous @ 12:09 - you say that "They seem to have forgotten that they were trading on other people's misfortune and got precisely what they deserved. It's called Karma"
Not so - the buyer paid more than anyone else on the day, reduced the debt by more than anyone else would. The buyer is the good guy.
I disagree with the person above who comments that the buyers deserve this because they bagged a bargain. Sure, there are some bargain hunters out there at mortgagee sales, but these people could have just been a nice family with three kids who fell in love with the house and so bid at auction. They got it for a good price - but that doesn't make them bad people. Are you suggesting they should have kept bidding after others stopped just so they paid more? Lucky they didn't! Their 40% discount just got wiped out.
Why on earth blame the real estate industry (everyone's favourite scapegoat) for conditions that are imposed by law?!
Agents CANNOT change the criteria for a mortgagee sale - and cannot even guarantee people will even be able to enter the property. To suggest security guards be posted at the home of someone who has just had their home forcibly sold from under them by their finance institution is naive to say the least.
"It's actually well known" by people who know what's involved that there is NO guarantee of the property's condition in a mortgagee sale, that's why people expect to get them CHEAP. Geddit?
You haven't got the 'balls' to put your name on such comment.
It is "wilful damage" to do that to someone else's property and it was someone else's property when the mortgagee took posession. It is about time the police did something before we all pay for this in higher lending charges.
A real estate agent talking about Karma...is that the next Tui billboard?
"My records show that these people paid 40% less than the last recorded sale. They seem to have forgotten that they were trading on other people's misfortune and got precisely what they deserved. It's called Karma"
If you don't believe in market value, you have no business being in real estate. The house is worth what the people paid, regardless of it being a mortgagee sale. The buyers have done nothing wrong.
yup! totally agree with everyone that disagreed with that Karma person... Cameron you are so true.
With an agents attitude like the one who is commenting on Karma no wonder the industry has such a bad rep!!
An auction campaign is run to promote competition amoungst buyers and produce solid bidding at auction. This is true whether it is a mortgagee sale or not. Often mortgagee auctions produce the most intense bidding and result in better outcomes than a regular sale. The new owners where the best buyers on the day of auction and in good faith purchased in accordance with the auction terms set by the lending institution. The only ones at fault here are the owners (or third party) that caused the damage to happen. They should be made accountable for these expenses and also for all the heartache caused to the new owners.
If the agent cannot understand the principles of buy and sell get the hell out of the industry, you are not doing a service to anyone.
http://jdo.justice.govt.nz/jdo/GetJudgment/?judgmentID=120785
http://jdo.justice.govt.nz/jdo/GetJudgment/?judgmentID=120785
I am so disgusted with "karma" comments by anonymous at 12.09pm. Clearly you and the lot that did all that damage to such a lovely warm property (which was providing shelter to the previous occupiers) do not deserve owing homes.
It was the ex-occupiers own fault that the home went under mortgagee sale.
I hope the new owners clean out all the bad rubbish and start new. let's all accept that it is now a do up and they can paint and add their personal flair.
They who did that evil thing will find themselves in a bigger rut. I hope anonymous@12.09pm will get what is coming to it to.
The agents contract with the vendor is to extract as much out of the buyer as possible, in every respect.
When an agent quotes previous sales as is done above, the information is a selling tool, not given to assist the buyer. To compare value one needs to compare apples with apples and conditions with conditions.
Mortgagee sales are particularly risky, because the vendor is in effect faceless and the sales conditions are written solely to place the onus and risk on the buyer and lock the contract solidly into place.
Often second mortgagees and lower security holders often get little or nothing in these events heightening the risk of spiteful actions.
How much is the risk factor worth to an informed buyer? I suggest a significant reduction in price is required.
It never ceases to amaze me the number of people in business who think the world owes them something. And if they don't get it, they'll try and take it using any means necessary.
But at the end of the day, people who run property scams are the ones who get the bad karma, and doing something like this will only make matters worse for whoever is responsible.
It's sad for the new owners because they've done nothing to deserve the grief. A downturn in property prices is not their fault, and as things stand in todays market, it's entirely possible they paid too much for the property and could lose even more if the downturn accelerates.
So to the seller of the property, you might think you didn't get enough money for it - but are you sure about that?
At last a considered comment from Arthur. When you purchase a property at mortgagee sale you contract with the Bank not the registered owner.In the absence of any contract with the owners and with the Bank documents SPECIFICALLY EXCLUDING CHATTELS AND FIXTURES, any purchaser must be sure of what they are buying. It is accepted law that chattels are furniture, drapes, dishwasher, microwave and any non hard wired appliances. Fixtures are chattels that have been attached to the property. For example this would include the kitchen the bathroom fittings all light fittings, TV aerials and any hard wired appliances. At a stretch it could be argued that doors, handrails and anything in the garden is a fixture. The Vendor clearly states that it is not passing title to any of these items
The purchaser has contracted to buy the property with none of those items included in the purchase price. Why then would he expect to get something he hasn't paid for? The reason properties sell at mortgagee sales for typically 30% less than their open market value is that you are NOT buying the chattels and fixtures which is why in this case he only paid apparently 850K rather than the full price of 1250K for which you would have received, in a normal sale, all the fixtures.
In short the purchaser has got precisely what they paid for and in this case it would appear that they did rather better than what might have happened.
If they were unaware of this then they are now wiser. If they were advised of the risks and chose to ignore them then that is entirely their fault. If they took legal advice and the solicitor failed to advise them that no title to chattels or fixtures were included in the sale then I suggest they invite their lawyer to put the firms insurers on notice
These I believe are the legal realities and if you fail to heed them whilst taking advantage of what you percieve to be a bargain then that is your problem and nobody elses.
The mortgage on a house is on the building, not on the chattels, this includes all sorts of things like carpets, drapes and whiteware, and even possibly the deck, if it was added after the mortgage was taken out.
The previous owners were within their rights to take away anything that was a chattel.
As pointed out by others, other items may have been removed by creditors.
Holes in walls and X's on floors are pretty much vandalism though. No argument there.
There was still damage to significant areas of property outside CHATTELS AND FIXTURES. Did they still get what they paid for... ? Great what you commented above, but you have not addressed the whole issue anyway. It does not sound like unpaid sub's, there are fixtures which would cost more to remove, than value brought from its recovery(emotional value excluded) ... Architraves?.Look's like waterproofing removed from deck - this is consistent with the loss of amenity resulting from the roof or wall cladding being removed.
One question - would the buyer receive insurance if the property was burnt down or blown up?
Karma? Are you kidding? They brought a house at a mortgagee auction so they deserve this? You're having a laugh. I hope such practice isn't accepted or deemed lawful by you as a 'real estate' person Mr Anonymous.
Yes they paid less but the previous sale was to a company owned by the Herron's in some way shape or form, and that was over the stated GV, read into that what you will.
"Trading on others misfortune" doesn't cut it when there are dodgy dealings of company ownership and asset distribution of failed companies going on.
How does it feel now the tables have turned? if your history is any thing to go by i wouldnt be expecting a light at the end of the tunnel and time soon. now your getting a taste of your own medicine.
i wouldnt feel sorry for you in a million years, and no one else should either, if they do then they obviously dont know what kind of people you are.
this is a moral dilemma that some bargain hunters or mortgatee purchasers enjoy benefiting at the expense of others and do not expect reprecussion how stupid can they be!
well the buyers certianly got what was coming to them, so i wouldnt worry
I looked at this house when it was on the market and was very interested except their was no garden for my children so we didn't go ahead. I had no intention of taking advantage of someone else misfortune, I just liked the house. Mr Real Estate Agent is wrong, it is not called 'Karma' it is called vandalism and the outing of the Herron Family is a small consolation for the new owners. Sadly the offending real estate agent has not attached a name, so as to allow the rest of us to celebrate a similar fate for them.
Mate it is not trading on other peoples misfortune it is trading on the original owners greed.
The neighbours did hear what was going on but thought the house was being made ready for sale. Carpet was seen being carried out but again thought this was excess carpet from when it was orginally laid. The new owners were fully aware of the potential risks and did everything they possible could to ensure a smooth purchase but what was out of their control, happened. The purchasers even tried to lay criminal charges against the previous owners for damages to " bricks & mortar" but according to legal advice & police the charges would be "thrown out of court" as nobody witnessed the culprit in action committing the crime. The house has been fully restored and looks in a better condition than when it was purchased. They are great neighbours compared to the previous ones!
I agree with you. My have been through the sale of my own house with my family. We tried everything to get a loan but were denied. Sometimes I feel as though I want to do that to my house before the new owners move in.
I think banks are getting greedy in this present market. We are in a similiar situation and the bank is selling us and we can have proved we can pay and have never default on payment. So I truly believe there is two sides to these stories. It is a very stressful time for the family in the home.
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