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Scam Warning

Posted by Henry in MI on November 16th, 1999 08:51 AM

A neat little scam is on the front page of today's newspaper. You sign the "standard contract" for home repairs but included in it is fine print that places a mortgage on the property to secure the work. If the property owner stops paying for the work, the contractor can foreclose on the property by publishing a notice in the legal news. Then, your property can be sold at public auction. Part of the deal is that the work does not have to be done or done well. If they give you a reason to stop paying, they just take your house as payment.

So far 25 homeowners have lost their property by this method and at least 250 more might be in the same situation. The courts are wrangling over this but it will take years to clear up. If the contractor goes bankrupt, the assets, including the mortgages, move to his creditors.

The lesson in all this is to read the fine print in any contract that you sign for home repairs and, if it does not make sence to you, don't sign it. Once scams like this come out in one area of the country, they are quite often copycats in other areas. Still think that there is no reason to check out your potential contractor?

Henry in MI

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