Dean Adams claims deed was changed after purchase agreement to buy house at 515 Bridge Street was signed
At Large Crookston City Council Member Bobby Baird, near the end of this week’s Ways & Means Committee meeting, asked his colleagues, Mayor Wayne Melbye and City Administrator Shannon Stassen if they thought it was a good practice for the council to change its mind in significant fashion in the two weeks between votes of the council committee and votes of the council.
Baird used the trio of Hoven Lane home lots that the council recently sold to CHEDA, who, in partnership with the Northwest Minnesota Housing Cooperative, will see to it that three single-family homes are built on those lots within three years. CHEDA bought each lot for $1,000, a massive discount compared to the market rates they were initially advertised at. Once word got around town that the City was willing to sell the lots to CHEDA for such a low price, other developers emerged, Baird said, indicating they would have been very interested in getting a similarly excellent deal on one or more of the Hoven Lane lots.
If that had caused the council, after its committee approved the sale of the three lots to CHEDA, to change its mind, Baird wondered, would that have been an acceptable course of action?
Melbye said that in most instances it’s best for the council, after its committee has voted in favor of something, to stay the course when a resolution comes up for a vote on a council agenda. (The Ways & Means Committee is comprised of the entire council and the mayor, who casts a vote on matters on which the committee votes. Once those matters reach a council agenda, typically two weeks later, the mayor only votes in the event the eight-member council deadlocks.)
“You could change things, but that would really make your business dealings bad news,” Melbye said in response to Baird’s inquiry. “…We could do it, but it would look really bad if you did, your word is not worth beans.
“Once the committee sends something to the council, it should stay that way unless something really changes,” the mayor continued. “You can change things in those two weeks, but there needs to be a big reason.”
Melbye used the RV park proposed for Castle Park years ago. The council early on seemed agreeable to the project, but when a public outcry ensued, the council changed its course and nixed the proposal.
To that, Baird implied that the council had somehow changed course on the sale of the City-owned lot located at 515 Bridge Street to local developer Dean Adams’ son, Roman. The council unanimously approved the sale of the lot the City acquired through the state’s flood hazard mitigation program in early 2017, and Baird said Adams is “wondering why he can’t get a deed on it.”
At that point, several council members and Melbye spoke up, advising Baird that the matter could not be discussed publicly by the council. “The lawyers are working on this, you can talk to (City Administrator Shannon) Stassen or the lawyers,” Melbye told Baird. “There’s an easement involved that the City has to maintain.”
“But why is it a legal issue?” Baird responded.
Council members, including Bob Quanrud, Dale Stainbrook and Clayton Briggs, again said the matter could not be discussed in that setting because it’s “in litigation.”
“It’s out of our hands,” Quanrud added.
“(Adams) is just wondering why he can’t get any answers from anyone,” Baird said. “…I don’t understand why it’s in court at all.”
It was suggested that maybe the council could schedule a session soon that’s closed to the public and media so they could discuss the matter privately with the the City attorney.
While both the City and Adams have sought and are receiving legal consultation on the matter, it’s not actually in court and it’s not in actual litigation.
The Times reached out to Stassen this week asking if he was willing and/or able to comment publicly on the situation involving the property sale to Adams. The Times also asked Stassen if City Attorney Stephen Larson from Fitzgerald, Reynolds, Harbott, Knutson & Larson, P.L.L.P. would be the best person to reach out to, and Stassen agreed that seeking out Larson was the best route to go. The Times subsequently asked Larson for his thoughts on the matter, and he said “we don’t comment on matters that may end up in litigation.”
Dean and Sheryl Adams are commenting on the matter, however, and have also shared with the Times various documents relating to the council’s initial approval of the sale, and communications and other things that have transpired since.
The Adams’ and their son Roman have retained St. Cloud attorney David Meyers of Rinke Noonan Law Office who has reportedly made multiple attempts to reach out to the city and their attorney to “reiterate” his understanding of the facts based on the documents provided to him and try to offer a settlement to re-negotiate the purchase price (of the 515 Bridge Street property which includes Lots 48 and 49 at Block One of Jerome’s Addition) to “resolve the City’s inability to honor the (2016) Purchase Agreement.”
In Meyers’ most recent email, dated Thursday, April 26, 2018, he went over the Purchase Agreement, which the City and Roman entered into on July 27, 2016 agreeing to the sale of “Lots Forty-eight (48) and Forty-nine (49), in Block One (1), Jerome’s Addition to Crookston, Minnesota.” with, in paragraph 5, the City agreeing to deliver a Warranty Deed to Roman “conveying marketable title to the Property” subject to six listed conditions, including a public easement for a multi-use trail along the river.
The purchase price was $40,000 and the Seller (City) had 90 days from the date of the Purchase Agreement, July 27, 2016, to rescind the Agreement if the City could not get approval of the sale from the Minnesota Commissioner of Management and Budget.
“The Purchase Agreement was drafted by the City, and signed by the City and Roman,” said Meyers in his email to Stephen Larson of Fitzgerald, Reynolds, Harbott, Knutson & Larson, P.L.L.P. “The City did not exercise its right to cancel the Purchase Agreement within 90 days of July 27, 2016.”
“On February 13, 2017, Crookston City Council adopted (the attached) Resolution No. 26498, declaring that it was in the best interest of the City to sell and transfer all of Lots 48 and 49, Block 1 of Jerome’s Addition (Crookston, Minnesota) to Roman Adams,” Meyers added. “The legal description of the full Lots in the Resolution is consistent with the City’s obligations under the Purchase Agreement to convey all of Lots 48 and 49.”
The City scheduled closing for November 27, 2017, at Strander Title and Abstract in Crookston to which the City “selected” the closing company and Roman “agreed,” the email continued.
On November 27, Roman’s bank wired “sufficient” funds to the closing company to pay the City for the Lots, plus closing costs, and Roman signed the Mortgage and all other closing documents.
“The Mortgage, the abstracting work, the title insurance commitment and all other closing documents included the full legal description of both lots as stated in the Purchase Agreement,” said Meyers’ email. “Roman believed that he had purchased all of Lots 48 and 49.”
Roman then, reportedly, stopped at the Crookston Housing & Economic Development Authority office and was given the keys and possession of the Property.
Note: At the CHEDA board meeting on December 19, 2017, City Finance Director Angel Weasner reported that the final flood rental had been sold and transferred. On December 27, 2017, CHEDA provided Roman Adams the rental deposit.
Meyers says that, on November 27, 2017, the City tendered to Strander Abstract at closing a November 1, 2017 Deed that did not match the legal description in the July 27, 2016 Purchase Agreement, the City Council’s February 13, 2017 Resolution, the Mortgage or any of the other closing documents. Dean Adams provided the Times with a copy of a second Warranty Deed drafted January 19, 2018 that the City allegedly sent to Grand Forks Abstract who forwarded it to Rinke Noonan which had the amended property description.
The “Addendum to Purchase Agreement”, dated July 27, 2017, which neither Roman nor Dean Adams say they were given or shown until after the November 2017 closing, pertaining to the purchase and sale of the property at 515 Bridge Street, property description reads: “Lots Forty-eight (48) and Forty-nine (49), in Block One (1), Jerome’s Addition to Crookston, Minnesota, except that part of said lots lying northerly of the following described line: Beginning at a point 75.00 feet north of the southwest corner of said Lot 48 as measured along the west line of said Lot 48; thence running in a northeasterly direction to a point on the East line of said Lot 49 being 130.00 feet North of the Southeast corner of said Lot 49 as measured along the east line of said Lot 49 and said line there terminating.—“
“The closing company rejected the Deed because it did not match the Purchase Agreement and other documents,” said Meyers. “According to Strander Abstract, the Deed was returned to the City with the request that they execute and deliver to the closing company a deed that matched the Purchase Agreement for the full Lots.”
“A.K., from Grand Forks Abstract and Title, part of Strander Abstract, the closing company, states in the (attached) January 4, 2018 email message (to me) that the City has known of the problem with the deed since December 1, 2017,” Meyers added.
Meyers continued saying the same day as closing, November 27, 2017, the City EDA sent Roman a Section 8 Housing Agreement to sign as owner-landlord of the Property. Then, on December 11, 2017, after the City was aware of the deed problem, the City EDA sent Roman as owner-landlord the (attached) list of items to repair. The letter stated that the City would withhold payment until the home was repaired. (The house at 515 Bridge Street is a rental property)
“On January 3, 2018, the City asked Roman to sign the (attached) Addendum to Purchase Agreement to change the legal description to match the City’s deed,” explained Meyers. “The City agreed to pay Roman’s legal fees to review the Addendum.”
Meyers responded to the Addendum request giving the City “a couple of options” being that the City could either purchase from Roman his interest in the Purchase Agreement, or the City could re-negotiate the purchase price to take into account that Roman would be getting less land than he contracted to receive in the Purchase Agreement.
“Neither Roman nor I thought it would be that difficult of a problem,” Meyers stated. “The City had agreed to sell more land than it was willing to convey.”
“All Roman was looking for was some reduction in the purchase price to make up for the part of the lots the City wanted to keep,” he added. “I was surprised that the City did not sit down with Roman to negotiate a reasonable settlement.”
Meyers says that within the past few weeks, he and his client have learned that, on October 2, 2017, the City received approval from the Office of the Commissioner of Management and Budget to sell the land to Roman.
“Roman’s legal position is that from November 27, 2017 through today he has been ready, willing and able to close under the terms of a Purchase Agreement, drafted by the City, signed by the City Officers and approved by the City Council,” remarked Meyers. “At closing, the City tried to change the deal.”
“Roman is not opposed to a modification of the Purchase Agreement, but he needs to be compensated for the loss of land,” he added. “Roman understands that the City has a problem with the flood zone area. This is a problem that the City understood at the time they signed the Purchase Agreement. Roman believed that he was buying the berm and land down to the river. The City now needs to retain the berm, which means that the agreement needs to be re-negotiated.”
“The City signed a Purchase Agreement to convey all the Lots. The Court will enforce the Agreement and convey the Lots to Roman. The City would have to deal with the State,” Meyers continued. “Roman purchased this property as an investment. If he sells it back to the City he will forego rents and benefits over the next many years. He would prefer to keep the home with all of the land he bargained to purchase. Roman also made improvements on the property, some of which were required by the City in order for it to be a rental property.”
“Roman will accept less than the appraised value, but he is entitled to a profit,” Meyers finished.
Meyers ended his email stating that Dean Adams, Roman’s dad and owner of Adams Heating & Cooling, was denied a building permit for the work done at the Bridge Street property with reasoning being that the permit was applied for after the work began, but Meyers stated that is was “common” for Dean to start the work then pull the permit as other past permit copies show.
“The City has denied the permit here, despite the fact that the City EDA instructed Roman to make the repairs in its December 11, 2017 Deficiency Report,” Meyer wrote. “The repairs had to be made in order for rent to be paid.”
“I am positive that the City is not trying to extort a favorable resolution to the Purchase Agreement problem with Roman by using its police powers under the Construction Code to withhold a Permit,” he added. “If that were the case, it would open up a lot more problems for the City than simply re-negotiating the Agreement.”
Since the building permit denial, Adams Heating Cooling and Construction has taken a Mechanic’s Lien out on the Bridge Street property and served the city (via certified mail on March 14, 2018) saying that $11,279.31 in work was done from December 2, 2017 to February 19, 2018.
As for where things currently stand, in an April 13 email sent to the council by City Administrator Shannon Stassen and provided to the Times by Dean Adams, Stassen states that Dean Adams completed the work at the home without a building permit, which is against the law. Stassen also indicates in the email that an easement is not something the City “can even consider giving up” in the situation involving Adams and the property at 515 Bridge Street.
Stassen ends his email by noting, “Mr. Adams is simply trying to pressure the City into a settlement in my opinion.”