The city of Dayton sued Tuesday to regain ownership of a property valued at $340,000 that it mistakenly transferred for about $635.
The deed’s owner, Eric Segalewitz, has said he rightfully owns the property and is willing to sell it back to the city for fair market value.
Intent matters in real estate transactions, said Shelley Dickstein, assistant city manager, and the city did not intend to sell the former site of the Cliburn Manor housing projects.
“Clearly, whenever you are dealing with human elements, errors and omissions unfortunately are commonplace,” she said. “The law does provide opportunity for those errors and omissions to be addressed legally — we’ve got a very strong case.”
The court hopefully will rule the city never authorized the sale of the parcel and that the transfer of ownership was invalid, Dickstein said.
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Segalewitz’s attorney, R. Jason Howard, said his client and the city were working toward a resolution, and they still may be able to do so without a trial.
“We’re hopeful we will all be able to work this out in the end,” he said.
City officials, however, said the city will not unduly enrich a local property owner for a clerical mistake.
The city filed a lawsuit in Montgomery County Common Pleas Court that requests the title of the Cliburn Manor parcel be returned to the city.
The lawsuit requests injunctive relief against Segalewitz’s Upscale Realty to prevent him from transferring or selling the 5-acre parcel.
The property is on Burns Avenue and has been targeted for redevelopment by CityWide Development Corp.
In 2011, the city of Dayton bought the land from Greater Dayton Premier Management, using $357,500 in general capital funds and $142,000 in federal money.
The city’s stated interest in the land was its development potential.
As part of the real estate deal, the city also received a small lot across the street at 50-56 Alberta St.
Upscale Realty submitted an application for the Alberta Street lot through the city’s Lot Links program, which allows people to buy vacant and abandoned properties for small fees.
The Alberta lot was deemed surplus property, and Upscale Realty’s application was approved. Segalewitz paid about $635 for the property, and it was transferred in 2012.
But city staff failed to separate the Alberta Street lot from the Cliburn Manor site, and both parcels were included on the same quit deed, officials said.
The mistake went unnoticed for years.
But about two months ago, Segalewitz learned he owned the Burns Avenue land as he arranged to sell his Alberta Street home and the adjacent lot.
The city asked Upscale Realty to execute a quit deed for the Cliburn Manor property to be returned to the city, but Segalewitz refused, officials said.
“Our legal team has attempted to resolve this matter without involving the courts; however, we have reached a point where we feel a lawsuit is our only option,” said City Manager Warren Price.
Segalewitz, who could not be reached for comment for this article, previously said he hoped to avoid litigation by reaching a fair settlement based on the property’s actual value.
Dickstein said the legal dispute threatens to impede development plans for the area by Miami Valley Hospital, the University of Dayton and South Park.
A multi-phase project for the Cliburn Manor parcel and other properties calls for constructing rental housing, town homes, cottages and commercial space.
“The fact that this is a redevelopment site is unfortunate,” Dickstein said.
The transfer of the Cliburn Manor site was the result of an error by city staff, Dickstein said.
When the deed was prepared, the legal description had the correct parcel number but also contained the lot number for the Burns Avenue property, she said.
Staff had several opportunities to catch the mistake, but no one noticed the inclusion of the second lot when the deed was written and processed, Dickstein said.
Later, as the number of Lot Link cases grew, the city changed its preparation and review for deed documents so they now contain more descriptive information and are easier to read, she said.
“The reforming of the deed preparation that we do certainly has helped staff do a better job of comparing what was requested and what has been prepared to be conveyed,” she said.
Dickstein said no city staff were disciplined because of the deed problems because it was an honest mistake and did not violate the city’s policies or procedures.
Dickstein and Assistant City Attorney Jonathan Croft signed off on the quit claim deed, dated Feb. 27, 2012. Croft resigned in July 2013 after accepting another job out of state.
Segalewitz said he deserves compensation for the troubles this ordeal has caused.
Last week, Rep. Mike Turner, R-Dayton, criticized the city for jeopardizing a piece of property critical to redevelopment.
Turner said in fiscal year 2008 he helped acquire $49,000 in federal dollars to demolish and revitalize the Cliburn Manor property.
He said the transfer of the property’s deed could constitute a misappropriation of federal dollars.
“Sadly, additional taxpayer dollars will be used in a lawsuit to recover what the taxpayers already paid in the original purchase of this property,” Turner said.