County, state seeks solution to sinkhole scam

Jim Greco, who has lived in Pristine Place since 2004, said his neighborhood is being devastated by people scamming the system with bogus sinkhole claims.

Instead of getting their property fixed, homeowners are pocketing the money and walking away from their homes, leaving behind a wake of devalued homes.

“It’s all a scam,” Greco said.

Recognizing the problem, others have joined the efforts to stop the recurring problem.

County Commissioner Wayne Dukes said Hernando County is losing some $150,000 annually in tax revenue from sinkhole homes.

At the last county commission meeting, Dukes displayed a neighborhood map that showed scores of red flags denoting homes where sinkhole activity was indicated, claims were reported and property values lowered.

Dukes said he wants to see a “cradle to grave” process that tracks these claims to make sure that if they are getting repaired, the values are readjusted by the property appraiser, similar to what is being done in Pasco County.

With the board’s consensus, he directed staff to examine an ordinance that would address those concerns and bring it back for discussion at an upcoming meeting.

“We are losing thousands and thousands of dollars in property taxes,” he said.

The scam works like this: Property owners call an engineering firm to do a study on their home and they determine there is some kind of sinkhole activity there, even though it may be minor structural distress and doesn’t compromise the integrity of the house itself.

The homeowner calls his insurance company which reviews the complaint and, if the adjustor determines there is some sinkhole activity present, will authorize repairs.

The insurance company cuts a check for repairs, the homeowner pockets the money, puts the home up for sale and sells it for a small amount of money and they are gone.

They leave behind a home that has now been devalued and hurts the property values of neighboring homes.

And, if there is a legitimate sinkhole present, it saddles the future buyer of the property with a potentially dangerous problem.

That is, if someone would even buy the home knowing there are sinkhole problems.

Usually, the home stays vacant and becomes an eyesore in the neighborhood.

‘A financial

catastrophe’

Property Appraiser Alvin Mazourek said the number of sinkhole claims have increased at an unprecedented rate in Hernando County and made his concerns known in a letter to state Sen. Mike Fasano, R-New Port Richey.

In 2005, the property appraiser’s office received 58 requests from property owners requesting a market value adjustment due to certified engineer-confirmed sinkhole activity on their property.

By 2009, the number rose to 402.

As of October 2010, the property appraiser’s office received more than 1,700 sinkhole claims in an attempt to lower the market value on properties.

“This is a situation that can no longer be ignored, considering each and every confirmed sinkhole reduces that respective property value up to 50 percent if left unrepaired,” Mazourek said.

Mazourek said sinkholes do exist and can be devastating to homeowners.

But many people are calling sinkhole companies, getting confirmations that sinkholes are present on their property and are not repairing the ground.

In many cases, these people are paying off their mortgages and other debt and leave the sinkhole problem unaddressed.

Meanwhile, the property is devalued and affects the appraiser’s calculations on homes in the vicinity.
Mazourek’s data shows that 40 percent of confirmed sinkholes are repaired.

“This leaves the county at an open-ended loss in value until such time the repair takes place and even then, the property value still suffers and additional 10 percent reduction,” Mazourek said. “If left unchecked, this problem has the potential to develop into a ‘financial catastrophe.'”

Senate bill targets

sinkhole fraud

Fasano said Hernando and Pasco counties are being hit hard by unscrupulous sinkhole public adjustors who are sending letters to homeowners saying they were able to get hundreds of thousands of dollars from their neighbors by identifying sinkholes on their property and can do the same for them.

The adjustors find activity, which may or may not be legitimate, and the homeowner files a claim with their insurance company.

Sometimes, it is easier for the company to cut a check – which can be as high as $100,000 or more – and write it off rather than deal with it. The homeowner gets a big payday, the shady adjustor gets his 10 to 15 percent cut and the sinkhole goes unrepaired.

“Homes are being devalued down to zero, hurting the tax base in Hernando County,” he said.

Fasano said the scam has to stop and Senate Bill 408 was introduced to stop it. But Fasano said the bill goes too far because it would no longer require insurance companies to offer sinkhole coverage, which would be devastating to Hernando and Pasco counties where sinkhole activity is prevalent.

Fasano said he hopes to salvage some of the bill and push through the part mandating the sinkhole be fixed and payment withheld to the homeowner until that occurs.

If not passed, Hernando County will continue to lose valuable revenue, potential homebuyers will purchase homes sometimes not knowing there are sinkholes on the property and the devaluing of property will continue.

“We’ve heard horror stories where people sell their house for 50 cents on the dollar and don’t fix the sinkhole,” Fasano said.

‘Playing the system’

Taylor Yarkosky, owner of Advanced Pier Technology in Brooksville, said he is well aware people are scamming the system and supports legislative efforts to fix the problem and remove the financial incentive gain homeowners currently have from not fixing the sinkhole on their property.

“The system, as it currently is, is not right,” said Yarkosky, whose company specializes in home foundation and stabilization repair. “It’s not working. The problem of sinkholes is legitimate. It’s severe. But there are people playing the system.”

For people like Greco of Pristine Place, relief can’t come soon enough.

He realizes there are doubtless many legitimate sinkhole claims in the county. But he also realizes that the potential for scamming is widespread.

For example, not every crack in the drywall indicates the presence of a sinkhole or void, he said.

“I would venture to say that every home you run into would have that,” he said. “I have cracks but it’s from settling. These homes are all built on sand. Many of these homes were built during the boom in 2003-04 and they had shoddy workmanship.”

Reporter Michael D. Bates can be reached at 352-544-5290 or [email protected].