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Mr. FOGARTY. I am not an expert on land sales or land, but I have observed it for several years as real estate editor. I found out that Florida has probably written more chapters in the history of installment land sales than any other State, but, regretfully, many of those chapters are filled with some distasteful examples of high-pressure salesmanship and disgruntled buyers.
Unfortunately, most of these buyers are little people who are either seeking a small profit, or are investing in a 75- by 100-foot lot which someday will become their retirement home.
And it's a pretty sad situation to know that a majority of these little people, who are planning ahead for retirement years, are often making extremely unwise investments.
The shame is that in many cases they are buying land that is far overpriced; has no resale value; and frequently will not be developed for decades, if ever.
And in most cases, these little people tell the same old story. I have many of them come into my office, and also I have several hundred letters here that are in response to an article which appeared. I pulled one letter on top and it is probably the latest letter we received, and this is a good example of what happens to some of this high-pressure salesmanship.
Be sure to have your lot surveyed. An FCD survey crew are pictured in a typi
cal conservation area scene. Lands such as these are being sold in conservation area 3.—Captions and photos supplied by MIAMI HERALD, FCD PHOTO BY JIM DAVIDSON It says here:
DEAR SIR: I am at my wit's end as to what will become of money my wife and I put into two over-sized lots at Cape Coral, Florida, through Staten Island, New York, salesman, who promised us we would double or triple our money in a year on those lots or we could build and live there when we retired. I have been paying on these lots now since April 1961.
The writer goes on to say that he paid $3,909 for each lot. He was told they were on the golf course and each time he visited Cape Coral he was shown different lots. Sometimes they were two and three blocks off the golf course.”
But constantly, we find that this promise of quick profit usually is the sale cincher. Most people are not aware of the problems and requirements that are needed in south Florida to turn a parcel of raw land into a property that is suitable for human habitation. Most people around the Nation know of our swampy land in south Florida and realize that drainage must be provided by huge canals before it is fit for development.
But most potential buyers or investors don't realize that, even though there is a drainage canal bordering their property, the parcel may still require additional land fill in order to put it above the minimum flood line.
The actual cost of the land can be incidental compared to the expense of making it suitable for human habitation. For instance, you can buy an acre parcel for $500, but the cost of raising that acre up above the flood level with fill dirt may cost you $2,000.
I am quite sure that this is a little-known fact, but a very important one that is almost never explained to potential buyers.
Florida has many fine, reputable real estate and development firms. But it also has its share of the quickly formed, fast-promotion firms which deal in highly speculative, substandard land.
And despite a continuing increase in swampland peddlers, State legislation to curb these operations has been mysteriously lacking: Although the State of Florida has received more than its share of nationwide publicity on swampland sales, legislation to curb these types of operations also is lacking in many other States.
A prime example of the lack of land sales laws is the recent successful sales campaign of a company known as Golden Palm Acres, Inc. Its sales headquarters was in Newark, N.J., and the commodity it was selling-acre-and-a-quarter parcels-was in south Florida. (Article appears on p. 332.)
Through the use of telephones, the company spread its sales to at least a dozen States in just a few months. Over 100 sales have been recorded in the deed books of the Dade County circuit court.
Even though the land was located deep in a muddy conservation area swamp, which will probably never be suitable for development, the New Jersey Real Estate Commission and the Florida Land Sales Board had no jurisdiction over the firm's operation.
How many sales do you think this company would have consummated if they had been required to make a full disclosure on the property? It seems reasonable to assume there would have been few if any sales if potential buyers had known that a flood control ease. ment gives the State the right to turn the area into a permanent pool of water at any
time. Senator WILLIAMS. Did this organization have any wind of registed office in Florida?
Mr. FOGARTY. They were just incorporated as a company in Florida.
Senator WILLIAMS. Were they resident so they could be reached with legal service?
Mr. FOGARTY. They had a resident agent.
Senator WILLIAMS. Couldn't an enjoinment action be filed against this?
Mr. FOGARTY. He wasn't violating any Florida law. They were selling for all cash, and our law was only on installment contracts. So there is a loophole in the law.
Senator WILLIAMS. I see.
Mr. FOGARTY. In 1963, the Florida Legislature, after the State received some nationwide publicity on swampland sales operations, passed legislation which set up the Florida Installment Land Sales Board. It was a step in the right direction and the board has done an extremely fine job, but unfortunately the legislation failed to place any major controls on swampland peddlers. In fact, the law controls only firms which sell by installment contracts.
It is now possible for developers and land sales agents to circumvent the board's controls by selling on a "deed and mortgage" basis. Efforts by the 1965 legislature to plug this loophole almost ended in disaster.
The board had good intent but its legislative programi suffered a quick death in committee.
Senator MONDALE. To what would you attribute their desire in trying to pass such a bill?
Mr. FOGARTY. I have a north-south situation in Florida and the north was in control of the legislature, as I understand it. We have had reapportionment, so we are hoping things may improve slightly.
Senator MONDALE. Did it have anything to do with the promoters who were profiting from these ventures and sales of swamplands appearing in effective lobbying?
Mr. FOGARTY. I would assume they have a very strong lobby, but, of course, all of the swampland sales are in south Florida and north Florida. I am not familiar with the land sales in north Florida, but it still was, I think-north Florida swung the pressure.
And there were reports that if an effort was made to revive the program the board might be abolished entirely. With a new Governor due in Tallahassee next year, plus a recent reapportionment of the legislature the chances are bright that the land sales act may come under revision next spring.
At the same time, the present makeup of the Florida Installment Land Sales Board is a good topic for discussion. Under the present law, the board is composed of three developers and two outsiders. It would seem that a rather chaotic situation could prevail if all of our government regulating agencies, both State and Federal, were set up on this basis. For instance, I don't think the public's interests would be protected by having a public utilities commission with three power company officials sitting on the board.
One developer on a land sales board, in order to provide guidance and offer advice, would seem sufficient. As far as the investment potential on south Florida acreage, there doesn't seem to be any large increase in prices on the bigger tracts. In fact, in the early 1960's, sales were relatively slow and prices remained stable. (Article appears on p. 336.)
We have many landowners who have control of thousands of acres and they are prepared to retain these holdings for years and years before realizing a profit.
But some owners have become tired of waiting for a high speculative price and have elected to sell off pieces of their property to the speculative operators.
A check of the deed books in the Dade County courthouse presents :in interesting sales picture. The records are filled with persons, mostly living in the Eastern States, who are buying, 2-, 5-, and 10-acre parcels. And the prices they are paying are almost shocking. You very seldom see Floridians' names in the deed book. Most of the sales are going to the Northeast.
The profit potential in the land sales industry is almost overwhelming. Golden Palm Acres, Inc., for instance, paid about $45 an acre for its land and then resold it at about $240 an acre. On the basis of this, the sale of a section of land would gross about $150,000. Cost of the land and administrative fees indicate the profit could well be $50,000 or more.
In checking recent land sales, I have found one company that i; selling a little better grade of land. It is paying $400 an acre and getting $1,000—all in 5-acre parcels. And the firm is finding a ready market for its sales in Puerto Rico.
It appears that land sales, particularly in Florida, will continue to soar. And I assume that the number of marginal companies will be on the increase. Although I am not fully in favor of Federal control on land sales, it is apparent that, if State legislative bodies are unwilling to take action, then controls must be given to a higher authority.
Senator WILLIAMS. Now, coming back to the Golden Palm Acres, is this the area that is within a flood control district?
Mr. FOGARTY. I can point it out here. (A map of the area follows:)
Map Shows Location of Golden Palm Acres, Newest in Florida Land Deals
... most buyers don't know land is under water 'most of the year
Senator WILLIAMS. You are just south of the lake?
Mr. FOGARTY. Yes; it starts south of Lake Okeechobee and runs on down to Palm Beach, Dade, and Broward Counties. Now, Golden Palm Acres is located right up in this corner. [Indicating.]
Senator WILLIAMS. That is in the interior of the southern part of Florida.
Mr. FOGARTY. Now, the nearest road is here. [Indicating.] That is down there, here.
Senator WILLIAMS. About how many miles would you estimate that to be, about 100 ?
Mr. FOGARTY. It is 10 miles from the nearest road, and
Senator WILLIAMS. That is more than 10 miles, about 25, I would say.
Mr. FOGARTY. It is two townships. It is around 10 miles up to this point or from—this does not show the roadway across.
Senator WILLIAMS. Is that the flood control district ?