On September 11, 2009, Mike and Zerla Bell closed escrow on their first home, a 1302-square-foot single-family residence in Lincoln Acres. It was a big step for the Bell family, who had been living in a two-bedroom, one-bath apartment in La Mesa.

“This is not a La Jolla neighborhood,” said Perry Wright, the realtor who sold the Bells their Freddie Mac–owned property. As Wright described the area, a small, unincorporated community located in the southeast corner of National City, a rooster belted out powerful crows in the background. But the Bells, who qualified for an FHA loan, were proud to call the area their home.

Wright described the Bells as “the salt of the earth” because despite their low income they have good credit. “They are people who keep up with their responsibilities regardless of their financial situation,” Wright said.

Zerla, 40, a homemaker, and her husband Mike, 40, a drywall journeyman, considered the move from a cramped 800-square-foot apartment to a home of their own a momentous occasion. It meant that their children, Elena, 9, and Jovani, 6, who had already moved several times, would finally experience some stability. The children would — for the first time — have their own bedrooms, and the Bell family looked forward to many years of enjoying and living in the rustic and modest confines of Lincoln Acres.

However, that joy was short-lived.

Less than a month after buying their home, the Bells received a notice from the County’s Department of Planning and Land Use that cited their dwelling for “unlawful construction” and “unlawful use of land.” An addition on their house had been built without a permit, and it violated the ten-foot setback regulation for their property.

The notice suggested the following correction: “Submit plans to code enforcement addressing all unpermitted construction. To obtain required permit and inspection be allowed or remove or restore to original condition. Remove 363 square feet of unpermitted addition on the west side of the dwelling.”

What did this mean?

Just weeks after moving in, the Bells suddenly faced the possibility that a portion of their home would be demolished. The 363-square-foot addition included the entry, living room, dining room, and kitchen.

Zerla recalled the Saturday they received the letter and her shock that they could lose their home because of a setback violation they were unaware of. The Bells had never received any information about the violations from the seller of the home.

The following Monday, Zerla spoke with the code compliance officer and heard a daunting tale of another home, in Bonita, that was in a similar situation. Zerla was told that the property owners had hired a lawyer, spent money trying to get a variance (an approved exception to the regulation), but eventually lost their house.

A few weeks later, on October 19, 2009, the Bells wrote a letter to their title insurance company, Fidelity National Title, to file a claim, as they had discovered that the violations were a public record before and during escrow.

After some research at the Department of Planning and Land Use, the Bells had found that a citation had been issued to Freddie Mac, the property owner. It had been mailed to Litton Loan Servicing, LP, a company based in Houston, Texas.

Two documents were found: first, a warning that was issued on June 30, 2009; and second, a fine for $100 that was dated September 9, 2009, two days before the Bells closed escrow on the home.

The Bells were confident that their claim would be approved because they believed that the code violation was one of the many items that their title insurance company covered.

“We have title insurance that covers everything,” both Bells said. Or at least that’s what they were led to believe.

Specifically, their insurance, according to their realtor Perry Wright, covered subdivision map act violations, zoning violations, and forced removal, as well as boundary wall or fencing encroachment and, most importantly, forced removal due to building setbacks.

However, the title insurance company denied their claim.

“They say it’s only items of public record that they cover,” explained Wright.

According to the insurance company, citations issued by the Department of Planning and Land Use are not considered public records. Wright pointed out that the citations are accessible to the public at the Department of Planning and Land Use. You can walk in there and get the information, he insisted. But the title insurance company defines public records as documents that are recorded in the county recorder’s office.

“They don’t record these types of items at the county recorder’s office,” said Wright. “It’s a [misleading] coverage. They’re offering coverage which truly doesn’t exist.”

So the Bells were left scrambling.

With their title claim denied, they sought the aid of county supervisor Greg Cox, and he assigned a policy advisor to their case. The advisor assisted in getting the Bells a resolution meeting with the Department of Planning and Land Use.

Before their meeting, the Bells went to the County Administration Building and verified that the tax records for the property listed it as 1302 square feet. The County had been collecting taxes on the illegal square footage.

Therefore, the Bells based their application for a variance on two facts: the County had been taxing the illegal square footage and the Bells didn’t have the money to correct the violations.

“We’re on FHA — 3.5 percent down plus closing costs,” declared Zerla. “We’re poor, we’re low income.”

However, at the resolution meeting they were again rebuffed. County officials informed the Bells that a variance wouldn’t be granted because their lot was big enough that they could rebuild at the back of their home and simply correct the violation.

“Correct the violation? We don’t have the money to fund the demolition and then build a new one. Basically, it’s their win-win situation, not ours,” Zerla said. The Bells estimated the cost to rebuild at $150,000.

The Bells’ assertion that they could not afford the renovation was met with indifference at the meeting, and they say they were told to consider the experience a life lesson.

Zerla says that someone reminded them that they have two children and told them that an unpermitted addition to their property could easily fall apart or burn down.

The Bells had expected to be met halfway, but instead they were given two options: correct the violation or let the bank foreclose on their house.

“You can’t intentionally foreclose. That’s irresponsible. Why would you do that? You got your first home and now you want to foreclose it? How else can you buy another home? Who else is going to loan you the money?” asked Zerla.

The Bells did not find a resolution at their meeting. “They’re just going to belittle you in there,” Zerla said.

After they informed Greg Cox’s office of the outcome of the resolution meeting, Cox extended no further help.

Undeterred, the Bells continued to fight for their property.

On December 31, 2009, they attempted to reach out to the seller of their home, Freddie Mac.

Their friend and realtor, Perry Wright, wrote a letter requesting that the company assist in the demolition and renovation costs for the property. He asserted that Freddie Mac had failed in its duty to inform the Bells that the home violated county regulations. He wrote that neither Litton Loan Servicing, LP, nor Freddie Mac had “notified the buyers, their lender or their agent of this material fact.”

Theodore Flo, counsel for Freddie Mac, responded with the following written statement:

“The notices of violation were addressed to Litton Loan Servicing, not to Freddie Mac. Litton informs us that it never received them. Moreover, Freddie Mac became aware of the apparent violation only after closing when an individual from the Department of Planning and Land Use (DPLU) called our broker’s office and later faxed copies to him. Thus, your assertion that Freddie Mac had actual knowledge of the violations throughout the escrow period is incorrect.”

Flo further stated, “We regret that your clients are unhappy with the outcome of their purchase, but we believe that attributing their misfortune to Freddie Mac is unwarranted.”

Wright refuted Litton’s claim of never receiving the citations, saying that a photocopy of the check with which Litton paid the $100 fine can be obtained from the Department of Planning and Land Use. Since Litton was operating as an agent for Freddie Mac, said Wright, Freddie Mac should take responsibility.

“We did our due diligence. As first-time homebuyers, we went to the County records and tax records offices,” stated Zerla, who feels they did everything in their power to make sure their first home purchase wouldn’t have any problems.

Mike added, “We researched the house and anything you can find.”

Among the things that they did, the Bells confirmed that the current footprint of the home matched the square footage in the tax assessor’s records and made sure there were no recorded zoning violations or liens on the property. However, the Department of Planning and Land Use citations were not recorded by the county recorder’s office. The Bells, like most homebuyers, were unaware that a visit to the Department of Planning and Land Use was necessary.

In the course of qualifying for the FHA loan, the home was appraised by a government inspector, who confirmed that it measured 1302 square feet. The inspector was relying on square footage sourced by the county recorder’s office.

Mike and Zerla found no red flags during their research and believed that everything was fine once an inspector appraised the home and approved their loan.

After the Bells received the citation, they went to the Department of Planning and Land Use and found that the department’s records for their home showed it was smaller than 1302 square feet.

The Bells are trying to do everything they can to hold off the County from issuing further citations and forcing them off their property.

They’ve applied for a permit to demolish and rebuild the unpermitted construction to their home. They hope this will buy them time while they figure out a way to raise money.

Their realtor isn’t optimistic. “They have to try to somehow scrape up the dough. I really don’t see how that’s possible,” said Wright.

He believes that there could be an easy fix. “We want the Department of Planning and Land Use to recognize that the buyers are not at fault, that the government failed in providing protections for the client,” said Wright. “With that in mind, grant that variance. They can do that with a pen stroke.”

“It put a big dent in our plans,” said Zerla. “The County did this to us. The government did this to us. Even our lender wouldn’t help us. If we foreclose, they still get paid because of the insurance. Everybody wins, except us.

“We can’t walk away. That’s the bottom line. It’s too much of a commitment to walk away,” Zerla said, as tears welled up in her eyes.