California Woman Faces Off With Developer Who Built $500K House on Her Hawaiian Property—Without Her Permission
A Bay Area woman named Annaleine “Anne” Reynolds bought an acre of land in Hawaii back in 2018, the first step in making a dream come true.
She planned to one day build an ocean-view home where she could host meditative women’s retreats surrounded by the beauty of area.
So imagine her surprise when she discovered that a new home had been constructed on her lot—just not by her!
She bought a vacant lot for a dream home that turned into a nightmare
Reynolds purchased her vacant lot on Hawaii’s Big Island for about $22,500 at a tax auction.
Five years later, in June of 2023, she discovered that a two-bedroom, three-bathroom home had been built on the land by real estate developer Keaau Development Partnership.
According to multiple reports, a contractor for the developer, PJ’s Construction, had accidentally bulldozed her Lot 114 in Puna’s Hawaiian Paradise Park instead of the intended Lot 115 and then constructed a $500,000 home on it.
After the sale was nullified, the developer reportedly offered a parcel of land of equal size, location, and value to Reynolds in exchange for her land, but she rejected that offer.
(Courtesy Anne Reynolds)
The error occurred when the contractor reportedly used telephone poles to measure the land instead of conducting a proper survey.
The county allegedly then mistakenly approved permits for the construction.
When the developers sold the property, the mistake was eventually discovered late in the process.
After the sale was nullified, the developer reportedly offered a parcel of land of equal size, location, and value to Reynolds in exchange for her land, but she rejected that offer.
Reynolds told NBC Bay Area she’d specifically chosen her lot based on the coordinates, the position of the stars, the position of the sun, and how it all aligned with her zodiac sign—so swapping properties simply wasn’t going to work for her.
Meanwhile, squatters moved into the house and trashed it, and she was on the hook for property taxes that had more than quadrupled.
The fight over the lot has turned ugly
After an agreement couldn’t be reached, the developer reportedly sued Reynolds, along with the real estate agent, the construction firm, the architect, and the county that approved the permits.
They claimed Reynolds was “unjustly enriching” herself from the mistake.
Reynolds then countersued the developer, saying she was unaware of the “unauthorized construction.”
The court dismissed the lawsuit against Reynolds and ordered the home to be torn down, with the demolition costs to be covered by the construction company.
Reynolds was also awarded $34,000 in attorney fees and was told further damages may be pursued. However, the developer and the construction company are both currently appealing that verdict, according to West Hawaii Today.
However, one real estate attorney tells Realtor.com™ he believe Reynolds has a good case for pursuing further damages against the developer.
“She may pursue damages on several grounds such as emotional distress, lost profits, enjoyment loss, compensation for property devaluation, and nuisance,” says real estate attorney Thomas Slattery, senior attorney for West View Legal in Palo Alto, CA.
While the situation is regrettable, there is an important takeaway for everyone.
“The key lesson is the critical importance of conducting thorough surveys and due diligence when dealing with property transactions and construction,” says Jon Alper, finance and real estate attorney from Alper Law in Lake Mary, FL.
This case underscores how small oversights can lead to massive consequences, emphasizing the need for accountability at every level.
“Developers, contractors, and even city officials need to adhere to rigorous checks and balances to avoid mistakes like this,” says Alper.
Is buying a vacant lot cheaper than buying new construction?
Is buying a vacant lot like Reynolds did, with plans to build later, cheaper than buying new construction?
Not necessarily, according to Mike Roberts, co-founder of City Creek Mortgage in Draper, UT.
“On paper, it might seem like you’re saving money by starting from scratch,” Roberts says. “But building a home comes with a ton of unexpected costs. You need to factor in site preparation, permits, and all those little extras that pop up. The price can climb quickly.”
Roberts has had clients thinking they’d spend $300,000 on a build, only to end up spending closer to $400,000 when everything was said and done.
However, that’s not always the case.
“In many situations, buying a vacant lot and building can be cheaper, especially in areas where land prices are low, and you have control over the construction budget,” says Yoann Dorat of One Sotheby’s International Realty in Delray Beach, FL.
There are pros and cons to buying a vacant lot
There are many pros and cons to buying a vacant lot, according to Dorat, who shared his thoughts below.
Pros:
Customization: “You have complete control over the design and layout of your future home.”
Potential savings: “Depending on the market, it can be more affordable, especially if you build gradually over time.”
Investment potential: “In growing markets, vacant lots can appreciate significantly before you even break ground.”
Cons:
Unexpected costs: “Clearing land, adding utilities, or navigating local permitting can be expensive and time-consuming.”
Time commitment: “Building a home is a lengthy process compared to purchasing a completed property.”
Market risk: “If the market shifts, you could end up with a lot or a partially built property that’s worth less than you anticipated.”
How to search for a vacant lotÂ
To search for a vacant lot on Realtor.com®, enter the name of the city and state you are exploring, and click the search icon that looks like a magnifying glass.
When you get to the listing page, click Property Type on the top left, then click the Land icon, hit Done, and click the search icon.
A full list of vacant lots for sale in that city will then appear.
Dorat says before buying a vacant lot, you need to do your due diligence. “Research zoning laws, building codes, and any restrictions on the lot to make sure it’s suitable for your intended use.”
It’s also crucial to check utilities and access.
“Confirm whether the lot has access to water, electricity, and sewer lines, or if you’ll need alternatives like a well or septic system,” says Dorat.
Work with an experienced local real estate agent who understands the land market and development process.
And, lastly, work a surveyor to confirm property boundaries—especially after reading Reynolds’ cautionary tale above.
For more tips from Realtor.com on how to buy a vacant lot and things you should look out for, click here.
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