S.F. gated street is sold un­der their noses

Cou­ple buy road in tax auc­tion. Res­i­dents are caught by sur­prise.

Los Angeles Times - - CITY & STATE - By Joseph Serna joseph.serna@latimes.com Twit­ter: @JosephSerna

Some of San Fran­cisco’s rich­est and most in­flu­en­tial res­i­dents can’t step off their front lawn without trespassing onto Michael Cheng and Tina Lam’s prop­erty.

That’s be­cause in 2015, the pri­vate street link­ing 34 mul­ti­mil­lion-dol­lar homes in the city’s Pre­sidio Heights was sold to the high­est bid­der right un­der the home­own­ers’ noses.

Af­ter pub­lish­ing notices, county of­fi­cials sold par­cel 1355-001 — also known as the one-way street Pre­sidio Ter­race — to Cheng and Lam from San Jose for $90,582.50 in a public auc­tion, about $89,000 more than was owed in back taxes and mis­cel­la­neous costs.

The 2-year-old pur­chase was first re­ported by the San Fran­cisco Chron­i­cle. Like most of the gen­eral public, the land’s pre­vi­ous own­ers, Pre­sidio Ter­race Assn., didn’t learn about the sale un­til re­cently.

Not even Cheng and Lam knew what they’d bought when they first won the lot, Cheng said. Scores of prop­er­ties are sold at county auc­tions, most of them worth­less sliv­ers of land too awk­ward to be de­vel­oped. The only thing Cheng and Lam knew was that it was in Pre­sidio Heights.

“We were bid­ding on some that were marginally us­able; this was the one that we won. You hope you did OK and didn’t over­pay,” Cheng said.

About five months af­ter the auc­tion, the ti­tle was of­fi­cially trans­ferred. So Cheng and Lam went to look at the lot but were re­fused en­try be­cause it’s in a gated com­mu­nity.

“We found this was an ex­treme prop­erty. It’s an en­tire area of the com­mu­nity, all the com­mon ar­eas,” Cheng said. “I was pleas­antly sur­prised.”

But he also had reser­va­tions.

“On the other hand, we also knew we’ll be com­ing head to head with some very wealthy peo­ple. They have a lot of con­nec­tions in the city,” Cheng said.

So the cou­ple hired a lawyer and planned their next move.

In May, a rep­re­sen­ta­tive for the cou­ple con­tacted the as­so­ci­a­tion and as­serted the cou­ple’s right to the land and asked if the as­so­ci­a­tion wanted to buy it back.

“We were hop­ing to just be like neigh­bors and talk about it,” Cheng said. “Our long-term goal is to just hold on to this prop­erty and to work out a deal” with the home­own­ers.

The as­so­ci­a­tion re­sponded to the rep­re­sen­ta­tive’s in­quiry July 17 in the form of a civil suit, which sought to negate the sale to Cheng and Lam. It al­leged that the county did not go to a “rea­son­able” ef­fort to no­tify home­own­ers that their street was in ar­rears and also that the San Jose cou­ple had no right to own the prop­erty be­cause it’s a “com­mon area.”

In fact, the as­so­ci­a­tion said, it had owned and man­aged the land since 1905 and paid prop­erty taxes be­tween $13 and $14 an­nu­ally. The only rea­son it fell into ar­rears, the law­suit claims, is be­cause San Fran­cisco had been send­ing the tax bills to an ad­dress on Kear­ney Street, which the as­so­ci­a­tion be­lieves was con­nected to an ac­coun­tant who last did work for the as­so­ci­a­tion in the 1980s.

Not even the as­so­ci­a­tion’s prop­erty man­age­ment firm was aware that pay­ments were not be­ing made, the law­suit said. In all, the as­so­ci­a­tion owed about $994 in back taxes, the law­suit said.

The prop­erty’s delin­quency started in the 200304 fis­cal year, ac­cord­ing to San Fran­cisco County.

“It’s re­ally up to the prop­erty own­ers to keep up with their bills,” said Amanda Kahn Fried, spokes­woman for the Depart­ment of Trea­sury.

Since re­ports of this pur­chase first broke, Kahn Fried said she’s heard from many of­fi­cials who say it’s a les­son on why prop­erty own­ers need to stay in­formed and up to date on their taxes.

“We’re all cre­ated equal un­der the tax code,” she said.

Marcio Jose Sanchez Associated Press

A STREET in San Fran­cisco’s Pre­sidio Heights is at the cen­ter of a civil suit that seeks to void its sale to a cou­ple who bought it for $90,582.50 at an auc­tion in 2015.

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