Are You a Real Estate Watchdog?

First in the Nation... "Whistle-blowers could receive as much as $500,000 in reward money under a 'Real Estate Watchdog' program announced Monday for tips leading to the detection of companies that have failed to report changes of ownership on their San Francisco properties." (San Francisco Chronicle, Mar 21, 2006)

Wow, that's a lot of money. What company in their right mind would buy a commercial property in San Francisco and then try to disguise it?

Here's why. Although California has seen property values grow by double digits annually for decades (OK, I'm exaggerating slightly), assessors can only increase property assessments by 2% per year, UNLESS a property is sold.

So when properties sell, tax bills usually rise substantially. But it's difficult for the assessor to track ownership changes when they simply reflect shifts in the control of a corporation and not changes in the owning entity itself.

According to Bloomberg News (Feb 21, 2006), this actually happened in San Francisco when AXA Equitable Life Insurance "transferred control of 81 percent of One Market to IBM's pension plan in 1986, without declaring the change in ownership, according to court documents." That turned out to be a $24.4 million "oops."

Is this type of fraud really widespread? Who knows? But San Francisco Assessor-Recorder Phil Ting thinks that it might be. "This program sends a message to property owners that we are not going to tolerate unreported changes of ownership. We are going to pursue every dollar owed to our City.” ... Are you ready to blow the whistle?