Backed by the nonprofit Community Law Center, six Baltimore neighborhood associations have sued a Texas-based property speculator for $8 million, saying his business model presents a nuisance that "threatens the well-being of the communities."
The defendant, Scott Wizig, owns about 140 city properties, plus dozens more in Houston, where he is based. In the early 2000s he was charged criminally by the state of New York and dubbed "Buffalo's biggest slumlord," eventually settling the case for several hundred thousand dollars. He started buying in Baltimore in 2001; City Paper took note of him three years later ("The Man Behind the Curtain," Feature, Oct. 6, 2004) and not much has happened in the nine years since then.
"He first got our attention with the 'We buy houses' signs," says Kristine Dunkerton, the Community Law Center's executive director. "He racked up quite a bill with the city for posting the signs. But he never did anything with the properties." Baltimore City strengthened its ordinance against so-called bandit signs in 2006. The city's housing department enforces the ban, though with difficulty ("Times of the Signs," Mobtown Beat, July 29, 2009).
Wizig buys run-down houses via tax sales, paying just a couple thousand dollars each for houses that are arguably worth even less, because most need expensive rebuilding to be habitable. In the early 2000s he was renting them to tenants for about $500 a month through a local property manager. City Paper found tenants who said promised repairs were never made. The manager and Wizig blamed each other, and Wizig said he was getting out of the rental business then: "We don't anticipate doing any more rentals with new customers [in Baltimore], but we are certainly going to look into and make sure the existing customers are being taken care of."
In Buffalo and Houston, Wizig's business model revolved around a lease-to-own contract, often one that required the lessee to rent for a couple of years before being able to exercise their option to buy the property. Houses Wizig picked up for a couple grand would routinely be sold for 10 times that-though the buyers often defaulted, beginning the cycle anew. New York prosecutors called the scheme deceptive; Wizig eventually pleaded guilty to hundreds of violations of state housing laws there. The Houston Press, an alternative weekly, wrote about Wizig's deals in Houston, though he has apparently faced much less legal trouble there.
Land records indicate that Wizig has sold many houses in Baltimore, financing the purchase through one of his companies. It is unclear in the documents whether these are rent-to-own deals. But Wizig's buyers do not always fare well, and Wizig is himself a defendant in five open foreclosure actions listed in Baltimore courts. The oldest, filed in August of 2011, involves 4046 Park Heights Ave., which a Wizig company called Compound Yield Play sold to Joan E. Lilly in 2008 for $43,200. Wizig had bought the property two years earlier for $2,202.
Another house Wizig sold to Lilly, 1419 E. Federal St., is now in receivership after city action. Wizig's bought it for $4,396 in 2006 and sold it to Lilly in 2008 for $39,900.
Wizig did not return City Paper's phone call.
Wizig's buyers and business partners are not party to the suit. Instead, neighbors of the dilapidated properties are suing under a law called the Community Bill of Rights. The law is more than a decade old but was amended only last year to make it usable to community associations, Dunkerton says. "We decided with the new Community Bill of Rights legislation . . . to put the community in the shoes of code enforcement."
The plaintiffs are the Coldstream-Homestead-Montebello Community Corporation; the Alliance of Rosemont Community Organizations, Inc.; Mount Clare Community Council, Inc.; Carrollton Ridge Community Association, Inc.; Operation ReachOut SouthWest, Inc.; and the Greater Greenmount Community Association, Inc.
According to the legal complaint, which was filed with co-counsel Venable, LLP, "Mr. Wizig, through his LLC entities, has purchased approximately 140 vacant properties at tax foreclosure sales and to date has failed to remediate any of them. This process of purchasing properties in disrepair and failing to properly abate any of their various City Code violations has established a pattern and practice that threatens the welfare of the Communities' neighborhoods. Indeed, the duration of this pattern and practice has continued over many years. . .".
The 20-page complaint is augmented by a 57-page exhibit with pictures of the 57 properties that are the subjects of the suit. All look like typical Baltimore derelicts, with missing windows, inexpertly boarded doors, trash-strewn yards, and collapsed roofs. Wizig's yellow signs with his Houston phone number adorn many of them. All are reportedly vacant, save for the occasional squatter.
Baltimore has thousands more vacant properties today than it did when Wizig first came to town, but his business practices may be only partly to blame. When asked about the deplorable conditions in some of Wizig's occupied properties in the summer of 2004, Michael Braverman, chief of code enforcement, told a City Paper reporter that the city had prioritized some areas of the city for housing-code enforcement. As Wizig's houses were not in those prioritized areas and the city had limited resources, there was not much the city could do.
"They need to make decisions based on priority," says Dunkerton. "They have issued violation notices. Some of them are outstanding for months; some of them are outstanding for years. They have not been able to deal with him."
Baltimore Housing spokesperson Cheron Porter says the city agency "fully supports" the lawsuit. "Our Code Enforcement department has been providing vital background and data that support their case," she writes in an email. "This action is a great example of how government and community groups can work together for the betterment of our neighborhoods."