The Money Pit

Mildred Bennett won't get her home back, or anything close to the full market value of the two-story Victorian in the Baker neighborhood from which she was evicted eighteen months ago. But under a settlement agreement reached late on Friday, May 22, the 72-year-old blind and mentally disabled woman will end up with a check for $35,000.

And that's $35,000 more than Bennett had when she was tossed out of the West Byers Place house where she'd lived for nearly half a century, ever since her parents bought it for her in 1949.

Bennett never had to make house payments, but she did have to pay property taxes. And in 1988, after losing her sight and her job as a hotel maid, she stopped making those payments to Denver County. Ultimately, the tax liens on her property were acquired at county auction by a Cherry Creek company called Hannah Investment Corporation. Hannah turned them over to another company, ADA Corporation. Although the companies had different names, they had a common owner: Mary Lou Paulsen.

At ADA's request, on November 14, 1996, five policemen forcibly evicted Bennett from her house ("Home Sick," January 22). Paulsen hoped to cash in by quickly selling the property to a local developer who'd offered $75,000--a 500 percent profit. Bennett would get nothing.

But ADA was unable to get clear title to the property, and so Paulsen sued Bennett, who by then was living at a state mental-health facility. Through a bar association call-in night, Bennett was put in touch with a couple of local lawyers. They agreed to take her case for free.

Jane Ebisch and Martin Bloom soon discovered an untested corner of state law that gives a "legally disabled" homeowner nine years to pay his back taxes before losing his home versus the standard three years everyone else is allowed. The lawyers felt certain that "legal disabilities" included mental impairments--which they were convinced that Bennett suffered. So they set about proving their client clinically crazy and thus eligible for the property-tax extension.

On the surface, it didn't seem a difficult job. Bennett appeared to be someone whose grasp of reality had loosened considerably. At the time she was evicted, her home was filthy, both unsanitary and unsafe. Trash was piled nearly to the ceiling; mice feces were scattered over the floors. At various times in the previous decade, her gas and electricity had been shut off. She caught rainwater to use in her toilet and for cooking.

"She could not care for her own hygiene (bathing, doing laundry) without assistance," concluded one psychiatrist who examined Bennett after her eviction. "She was unable to manage her own funds. She never...showed an understanding of the reason for hospitalization." Another psychiatrist offered a more definitive diagnosis. "She is a paranoid schizophrenic," Dr. Sheila Deitz concluded after interviewing Bennett at the request of Ebisch and Bloom.

ADA's attorneys were more circumspect in drawing conclusions from Bennett's behavior. For instance, one physician who analyzed her for the investment company pointed out that Bennett was still able to make logical day-to-day choices and thus was not crazy. His example: She had elected to buy food instead of pay her property taxes--an option that, while "sad," illustrated her ability to think straight.

The same physician, Dr. J. Gary May, also hypothesized that even if Bennett were crazy now, it was not a condition that contributed to her dire financial predicament. In fact, he continued, her mental instability was probably brought about only recently--by her eviction.

After a lengthy postponement, the trial was set for May 26 in Denver District Court. Ebisch says she had always been willing to listen to a settlement offer; however, as an attorney working for nothing, she was not desperate for one. "We felt we could do this on principle," she adds. "But they didn't put a reasonable offer on the table until May 15."

ADA's first proposal was $25,000. After a week of legal give-and-take, the two sides agreed on $35,000. The settlement still must be approved by Denver Probate Court; if Bennett is found to be mentally impaired in examinations to be scheduled over the coming months, her attorneys say they will ask the court to administer the money through a conservatorship.

The settlement amount is a far cry from what the house would bring on the open market--even in its dilapidated condition. Nevertheless, Ebisch says the prospect of endless appeals convinced her to endorse the deal. "The appeals could take two or three years, and Mildred is already 72 years old," she says. "This is money in the bank now, when she needs it."

Both Paulsen and her attorney, Nina Iwashko, declined to comment on the settlement. But while it represents a deep cut in the company's potential profit on the house, ADA Corporation will still probably make decent money off the deal.

Over the past eight years, the company has spent about $15,000 on tax liens and expenses to acquire rights to Bennett's house. Add to that the $35,000 it must now pay Bennett, along with what Ebisch estimates is about $20,000 in legal fees that ADA rang up in the past year. If the house sells for $75,000 (developer Bill Myrick reached an agreement to buy the house from ADA for that figure in 1995; the status of that offer is now uncertain), that would leave Paulsen with a $5,000 profit.

Although both Bennett and ADA should come out of the deal with something, the settlement stops short of setting any legal precedents. It leaves unanswered the question of how disabled a person must be in order to qualify for the property-tax break. Bennett's case would have been the first to raise the issue in Colorado; now the definition of "legally disabled" will have to be pondered by another judge in another case.

After being evicted from her home, Bennett was taken to Denver General Hospital for evaluation; she eventually stayed for two months. From there she was shuffled to Fort Logan, where she resided until June 1997. Since then she has been living with her son in a family friend's basement, accommodations for which she continues to pay $10 a day.

In all of this relocation, Bennett shares something in common with ADA owner Paulsen, her evictor: Both have been moving around. According to Denver city records, a little over a year ago Paulsen moved to the Cherry Creek neighborhood, where she bought a new, 6,000-square-foot home assessed at just under three-quarters of a million dollars.

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