I-Team: Experts say court-approved sale was below market value

Guardianship attorney buys home from ward

INDIAN ROCKS BEACH, Fla. - Editor's Note: An attorney representing Gary Fernald tells the I-Team that the planned purchase of this home will not go through  due to issues with a reverse mortgage. Fernald served as the attorney for the original guardian of the home's owner, Jacqueline Harwood. After that guardian resigned, he and his wife made an offer to buy the property, which was approved by the judge in the case in December.

The I-Team has uncovered a real estate transaction, done with the court's approval, potentially benefiting an officer of the court.

 The purchase involved an attorney hired to represent a woman who had been incapacitated and placed in Florida's guardianship system.

 Experts say the attorney didn't pay a fair price for the property and walked away with a big real estate bargain.

 Jacqueline Harwood, now 77-years-old,  lived in the home from the time it was built in the 1940's until last June.

 "This is a good lot here. It's deep and it has water access to the Inland Waterway," said Arthur Goetz, describing his neighbor's home. "It's a nice piece of property."

 Filled with a lifetime of belongings, it needs updating, but it meets the number one rule in real estate.... location.

 "It's a quiet little street, tucked away in its own private oasis where you can put your boat dock, mangrove lined canals, and when you look out, you can see the Gulf of Mexico. It's something unique," said Jeff Beggins, a broker for Century 21 who oversees 300 agents in 11 offices.

 The sale of the home was approved by a Pinellas County Probate judge in December for $165,000.

 "I just think that's way under market value," said Goetz.

 Harwood was declared incapacitated by a court in June of 2013 after showing signs of dementia, like repeatedly locking herself out of her home and walking down the street in her bathrobe during the day.

 Patricia Johnson was appointed as her professional guardian after she told us she was contacted about the case by the Florida Department of Children and Families.

 The I-Team has referred to some of Johnson's other cases as part of our series of reports on Florida's guardianship system.

 Johnson moved Harwood into an assisted living center and hired attorney Gary Fernald to serve as Harwood's guardianship attorney.

 "Typically the lawyer has a relationship with the guardian, but they're both paid out of the assets of the ward," said retired Hillsborough County Judge Susan Sexton, who has overseen thousands of guardianship cases.

 Sexton says part of the attorney's role is to make sure every transaction involving the ward's assets is done by the book.

 "Absolutely, that is the attorney's role," she said.

 The sale of Harwood's home would help pay for her future care, but the house was never put on the market by a realtor.

 Court records show, however, that a company called Rebecca Jane and Associates, LLC., which is not a registered company in Florida, offered to buy the home in November.

 Attorney Gretchen-Elizabeth filed that petition to sell the home on Johnson's behalf.

 When the I-team questioned the transaction, both Gretchen-Elizabeth and Johnson resigned.

 "Shortly after the hearing was set, Mrs. Johnson made the decision to resign as Mrs. Harwood's guardian," said Fernald, in an e-mail sent to the I-Team. "At that point Gretchen-Elizabeth canceled the hearing and withdrew her appearance.  Judge St. Arnold signed the first order approving the sale on November 20, 2013.   Mrs. Johnson filed her petition for discharge on November 27, 2013."

 It turns out the original buyer was actually Gary Fernald, the attorney who asked for Harwood to be incapacitated.

 In December, Judge Jack St. Arnold signed an order allowing Fernald to buy his former client's home for $165,000.

 

When asked about her involvement in the original petition, Johnson, in a statement, said she was not aware that Rebecca Jane & Associates, LLC. wasn't a registered corporation.

 "I did not prepare the petition, nor did I sign the petition," Johnson said.

 "The petition correctly alleged that that judge had actual knowledge of the relationship between the buyer and the guardian. When Judge St. Arnold approved the transaction, he had actual knowledge that Mr. Fernald was the buyer. I am sure that if he felt the transaction was inappropriate, he would not have approved it," Johnson responded.

  The county appraiser's office listed the property's value at $229,000.

 Broker Jeff Beggins, using data from 15 similar properties, believes it is worth even more.

  "As a tear-down lot, I think you'll get in the $250,000 range for that property and then some," Beggins said.

 Three other realtors the I-Team spoke with believe the home was undervalued.

 A unit in a triplex on the same block, which is newer but of similar size, is listed for $360,000.

 Gary Fernald, who declined an interview, said he consulted the Florida Bar Association's ethics hotline and made sure the purchase price was equal to or above its fair market

value.

 He gave us a copy of the appraisal report he filed with the court, which valued Harwood's home at $61,000.

 "This particular appraisal doesn't meet the smell test, and anybody that shops for anything can see that just by reading the report one time," said Francois Gregoire.

 Certified Appraiser Gregoire served four terms as Chairman of the Florida Real Estate Appraisal Board and has nearly 40 years of professional experience as an appraiser.

 He points out that the three lots used as comps in the Harwood appraisal weren't waterfront and didn't share the same zoning as Harwood's property.

 One lot was in another city and was only 33 feet wide, barely large enough to construct a home on.

 That lot was 5,328 square feet and sold for $70,000.

 Harwood's lot is 8,538 square feet.

 "You're not gonna be looking at lots four blocks away from the beach where you can't see the water that are covered with trees. They're not comparable," he said.

 Gregoire also questions why Fernald was allowed to provide the only assessment of the home's value to the court.

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