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Government Seizure of Investment Properties

Florida’s Third District Court of Appeal has held that a government agency temporarily may seize real property after proving only that the property is being used conceal, transport or possess contraband. Gomez v. Village of Pinecrest, 17 So.3d 322 (Fla. App. 3 Dist., 2009). The facts of the case are familiar to many real estate investors:

Zenaida Gomez purchased an investment home in Pinecrest in Miami-Dade County. She leased it to Mr. and Mrs. Herrera after meeting with Mrs. Herrera and obtaining a copy of her driver’s license. She would go to the home to collect rent for the next two months. She never went inside the home, nor did she ever meet Mr. Herrera. The Pinecrest Police Department, acting on an anonymous tip, discovered that the home was being used as a hydroponics lab to grow and harvest marijuana plants.

Real property may be seized pursuant to Section 932.704, Florida Statutes, when it is used to conceal, transport or possess contraband such as illegal drugs, methamphetamine labs, or other illegal products. The Court, interpreting the statute, held that the seizure is a two-step process. First, the seizing agency (in this case, the village police department) must prove it is entitled to “seize” the property, and secondly it must prove it is entitled to forfeiture of the property.  To seize the property, the owner of the real property must be given notice of the right to have a hearing. At the hearing, the agency must prove only that the property was used to conceal, transport or possess contraband. There is no need to prove that the real property’s owner had any knowledge of the illegal use of the property.

Once this illegal use is proven, the agency may take control and possession of the property to protect it from destruction or further illegal use until a full forfeiture hearing can be held.  In that second phase of the process, the agency must prove by a preponderance of evidence that the property’s owner knew or should have known after reasonable inquiry that the property was being used, or likely to be used, in an illegal enterprise. If the agency can meet this burden of proof, then the property will be forfeited to the agency for destruction or other disposal.

At the first stage adversarial proceeding, the agency in this case presented evidence that Ms. Gomez had never inspected inside the home and had never met her male tenant. They asserted that this was sufficient evidence to prove her knowledge (or that she should have known) that the home was being used to possess or conceal illegal contraband. The Court held that this was not necessary at that stage of the proceedings. At the first stage of the proceedings, the agency only had to prove that the investment home was being used to possess illegal contraband.  Therefore, the agency had the right under the statute to take control of the home after the first hearing.

This case is a wake-up call to landlords who fail to conduct background checks on their prospective tenants (or even meet the tenants face-to-face prior to renting the property), or who neglect to periodically inspect their properties (occupied or vacant) to ensure they’re not being used in illegal activities. If the property is being used in such activities, it is clear that – under this court’s reasoning – the property can be seized at least temporarily and may be forfeited forever.

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