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Ann Arbor Observer
October 2007 issue
Things are quiet these days at 1960 South Maple. The barn workshop is silent, the free-
range chickens are gone, and the two-story house is empty of life. Looking through the
windows, one can see an unplugged television set, a couple of empty cardboard
boxes, and a freestanding woodstove. The only visible evidence that Peter Beal lived
here for almost thirty years is the exquisitely carved wood trim inside the house. Beal is
gone because a law that expired in 1999 was used to evict him for not paying taxes in
1995. But that wasn't the first time Beal got in trouble for not paying taxes. In fact, this
isn't even the first time Beal has lost his house.
"1996 the IRS seized everything I owned except my underwear, ' says the earnest and
affable woodworker. "Seized and sold my tools. Seized and sold my house - sold it at
an open auction. I went to it with my wife and daughter.
"A guy from Southfield bought the property - paid sixty-two thousand dollars. After he
bought it, I approached the guy, introduced myself, and showed him around the
property - and he was so appalled by what I showed him that he threatened to sue the
IRS if they didn't rescind the sale. So they declared they shouldn't have seized the
house because there was no equity in it and we were given back
the house.
No wonder no one else wanted it. The circa- 1870 house lacks central heat, and it's
right next to the endless howling of 1-94. The house has no real kitchen or completed
bathroom, and its septic field regularly overflows. "I tell people that essentially I'd been
camping out there
for thirty years," Beal says with a laugh.
Beal bought the wooded one-acre property in 1978, agreeing to pay the $35,000 price
on a land contract. Cut off from the rest of Maple Road when the freeway was built, it's
reached today from Scio Church Road. Though the home's terrible condition and the
freeway noise contributed to both his divorces, 1960 South Maple suited Beal. No
matter how much noise he made with his power tools in his barn workshop, no
neighbor could hear him over the roar of the highway.
Beal is proud of his independence, and customers praise his craftsmanship. Yet he
has never found the formula for making a consistent living as an artist. And as a result,
he wound up at the mercy of the tax authorities. After 1993, Beal pretty much stopped
paying his property taxes. He eventually paid his 1994 taxes in 1999 and his 1996
taxes in 2001, but that's all.
Until 1999, state law provided that when an owner stopped paying property taxes, the
county could sell the deed at public auction for the amount of the back taxes. If the
original owner didn't redeem the deed by paying the taxes plus a 50 percent penalty,
the new owner could foreclose.
By 2003, Beal owed the county $23 ,798. And in October of that year a company
named Destiny-98 notified him that it had bought his deed for $2,104 - the amount he
owed for 1995. If he didn't pay that amount plus a 50 percent penalty by April 30, 2004,
the company warned, it would foreclose and evict him under the provisions of the old
state law.
"When other people bought the deed before, I'd always been able to scrape together
the money and redeem it," Beal says, "But not this time."
What happened next is hard even for Beal to explain. Borrowing money from relatives,
he paid almost all of the back taxes he owed from 1997 through 2002. But he
inexplicably missed 1995- the year that mattered most. Destiny-98 foreclosed in May
2004, perfected its claim in June by paying the remaining outstanding 2002 and 2003
tuxes, and moved to evict Beal in July. For a total of $5,987 it had bought 1960 South
Maple.
"I'd received all the proper notices by process servers," Beal acknowledges. "Destiny-
98 did everything by the book." But Beal says he only "looked at' the notices: "didn't
read all the fine print on the back telling me they were foreclosing."
Beal says he didn't believe the county would cut him loose while be was paying off his
back taxes. And he couldn't believe anyone else would really want 1960. "I know what
that property's worth-about a hundred and thirty to a hundred and forty thousand-and I
know that nobody who's serious about real estate would have bought it the way it is,
because it can't be occupied the way it is."
"There's a big part of me that has never grown up"
Beal, sixty, was born in Uruguay-his father, a career diplomat, was stationed there.
Later- assignments took the family to Brazil, then Colombia, then Portugal. When it was
time for Peter to go to high school, though, he was sent home to boarding school. The
choice came down to an East Coast prep school or Cranbrook in Bloomfield Hills.
Beal chose Cranbrook and went on to Antioch College in Ohio, where he completed a
premedical program.
Elliot Valenstein, now a professor emeritus of psychology at Michigan, first got to know
Beal at Antioch in the early 1960s. "I was running a biomedical research facility, and
Peter worked as a research assistant in my laboratory," he says. "He was the most
reliable, dependable assistant we ever had. He even learned to do some surgery on
the brains of animals."
When the U-M hired Valenstein, Beal followed him back to Michigan. "I was working in
the immunology department as a lab tech, trying to decide whether or not to stay in
academics," Beal recalls. Beal applied to medical schools but none accepted him. As
Valenstein remembers one interview, "Peter showed up in leather pants with a knife in
his belt. He liked to whittle all the time. I warned him against doing it, but he did it
anyway. Let's just say I don't think he had his heart set on getting in."
At that point, Beal says, “I decided to do something else. I've just always been good at
doing things with my hands. At Antioch I was making dollhouses and when I came to
Ann Arbor, I kept making doll houses. Then I started to make furniture for people, and
they liked it and I liked it, and I decided not to go into a doctoral program."
Morry Nathan, formerly of Kerrytown's Smith & Nathan Furniture
Makers, says he and his wife have known Beal since the late 1970s, when they hired
him to put on addition on their home. Nathan says he was aware of Beal's tax
problems: "He told me that more or less by accident he'd neglected to pay one year's
taxes. He asked if he could borrow some money. He was trying to get a group of his
friends together to bail him out. We couldn't contribute, and I don't know anyone who
did.
“Peter was always on the edge financially. He was late on paying bills and late on
getting work done. What can I say? He's a very bright guy, a very nice guy, but he's a
classic procrastinator."
Dave Childs recalls the time Beal built a difficult piece of furniture that Childs's wife had
designed. "He's a very talented and a very underpaid craftsman," Childs says, "He
charges a fair price, but being a craftsman, he puts way more work into whatever he
does than he could possibly be compensated for." Child adds that Beal sometimes
"has gotten screwed by people who didn't pay him on time."
Asked why his work pays so little, Beal replies, "I live on the steep side of the learning
curve all the time. I make my guess as to what it'll take to make something, and if I'm
wrong. I lose money."
But working independently is essential to him: "I couldn't imagine being an employee of
an organization, even now. I just can't do it. You could say there's a big part of me that
has never grown up."
"Mr. Beal is not a responsible citizen”
The old and new owners of 1960 South Maple finally met face to face in June 2004.
Destiny-98 vice-president for operations Doug Gale “came to 1960 after foreclosing,"
recalls Beal, "and insisted that
1960 had 'commercial potential' and 'he could work with difficult properties' - unlike me.
"When I asked him what he would take as a settlement, he said he thought the place
was worth three hundred thousand dollars"- twice what Beal thought it was worth and
fifty times what Destiny
98 paid for it. When he heard that, Beal says, "I pretty much just fell apart." But, though
shattered, he refused to leave.
"Twice over the phone Gale offered me a thousand dollars to hand over the keys and
walk away," continues Beal. "Both times I told him that that wasn't what I was interested
in. I asked what he thought would be fair, and he offered to accept fifty thousand dollars,
which at the time seemed to me too much, so I countered with thirty-five thousand. I
thought if I offered a significant chunk of money they'd, go away - [but] they wouldn't,"
Five months after the foreclosure, Beal finally hired an attorney. Asserting Beal's "quiet
title" to the property, Scott Munzel argued that because the state changed the laws
governing foreclosure in 1999, the statute of limitations had elapsed for Destiny-98's
claim to Beal's 1995 tax deed.
The courts didn't agree. In April 2006 circuit judge Donald Shelton decided in favor of
Destiny-98. The Michigan Court of Appeals upheld the verdict two months later, and
finally, this July, the Michigan Supreme Court declined to review the matter-and Peter
Beal’s day in court was over.
The new law is much simpler and much quicker." Munzel says. 'The county treasurer
sends out three notices. Six months later, the treasurer goes to court to have you
evicted and then sells the tax deed at public auction. Peter's was one of the very last
cases to be heard under the old law - and when they (the State Supreme Court)
decided not to hear it. poor Peter Beal just got shafted.”
Destiny-98's Doug Gale disagrees. "We didn't, foreclose on him because we wanted
to, but because it was what had to happen,"
Gale says. "This guy is not the innocent he proclaims himself to be. The fact of the
matter is: Mr. Beal is not a responsible citizen. He may be a very good woodworker,
but he can't legally pay for the place he's lived in for thirty years."
Gale says that his company has bought tens of thousands of tax-delinquent properties
across the country and that 97 10 98 percent of them have been redeemed by the
owners, "We're not in it for the foreclosing," he says, "It takes too long and costs too
much, We're in it for the interest. That's where we make our money, not on foreclosing.
But when we have to do it, we do it."
Gale says Beal has had plenty of chances to settle his debts. "Mr. Beal was given at
least two attempts to repurchase his property for reasonable sums after the
foreclosure. While it is unfortunate that he never look advantage of his many
opportunities to recoup his property, we hope that the property will end up in the hands
of responsible owners who will care for its beauty and be responsible for their
obligations."
"I just didn’t have any money.'
Beal left 1960 South Maple in May. He gave the chickens that had strutted around the
property to friends and to Dawn Farm and moved his woodworking studio to a rented
barn on Stein Road.
"The woman who owns the property has a house there that's pretty much empty," he
explains, "and she's rented me an apartment in the
House, so I'm living where I work again."
But even after losing his home. Beal's tax troubles aren't over. "In Mr. Beal’s case,"
Doug Gale says, "if we didn't foreclose, the IRS would have.” That's because Beal
owes more than S250,000 to the federal government.
Beal traces his income-tax troubles to a 1976 house renovation, "a job I shouldn't have
ever touched." He and a crew of five worked on the property for two years, but finally,
Beal says, "the job collapsed. The
owner said he couldn't take it any more." By that time, Beal had fallen behind financially
- and crossed a tax collector far more merciless than Washtenaw County. Though he'd
collected federal payroll taxes
from his workers, he hadn't turned all that money over to the IRS.
When the job ended, Beal says, he was "more than five thousand and less than fifteen
thousand {dollars] behind in payroll taxes. I'd get these notices and I'd call them, and
they wouldn't cut a deal. I'd tell them there's no way in hell I can pay that amount, and
they'd tell me that that was the amount I had to pay.”
Finally, in 1986, Beal declared bankruptcy. "I couldn't pay off the land contract on 1960.
Eventually I wound up making a deal with everybody - everybody but the IRS. And all the
time the interest and penalties on the payroll taxes are growing and growing and
growing. They said that now l owed them between a hundred and forty thousand and
two hundred and fifty thousand dollars. And I couldn't possibly pay that. How could I?”
Eventually, in 1996, the IRS seized 1960 South Maple. But after the buyer from
Southfield backed out of the purchase, Beal got it back. Beal says the IRS then told him
"I'd been ruled uncollectible. They told me if I was a good boy and paid my income tax
every year, the lien against 1960 would expire in 2002."
But Beal couldn't even do that. "After my wife left me with my daughter, I just didn't have
any money," he says, “I filed my taxes every year, but I wasn't able to pay any. Then in
2002, when the lien should have expired, the IRS rejuvenated it for another ten years.
And there was no way I could deal with that."
The IRS is now garnishing every paycheck Beal receives for teaching woodworking at
Washtenaw Community College. “They've threatened to garnish up to minimum wage,"
says Beal, "but I don't know how they expect me to live if they do that. I can't live on
minimum wage:'
Out on Stein Road, Beal is still woodworking, though at a much slower pace. "If things
keep going this way, teaching may become my main focus," he says. But while he says
he approaches teaching "very seriously," his pride and independence could jeopardize
that job, too. "If I don't like what's happening with the school," he warns, "if they do
something I don't approve of-I'm bugging out.”
After discussing his problems for a couple of hours, Beal breaks down. "How the fuck
did I let this happen? I'm not stupid, and I just can't believe that I could be so totally self
destructive. Sometimes I thought I'd gone literally insane-that I'd really lost touch with
reality. I can get myself into incredible trouble-but not like this! It's just nuts!"
Beal still has many friends and supporters. After the Ann Arbor News ran a story about
his troubles last spring, they began collecting signatures on an open letter to Doug
Gale, urging him to sell the property back to Beal. A large sign on Scio Church Road
across from the property refers passersby to a website, SupportBeal.com, where Beal
has posted a video telling his story. But with his legal options exhausted, it seems that
BeaI's only hope of returning to 1960 South Maple is to cut a deal with Doug Gale.
Beal says that he would move back to 1960 South Maple in a minute if the price were
right, and that he's ready to pay "fair market value" for the property. But he doesn't
expect that to happen. "The way Doug Gale operates," he predicts, "He'll try to sell it
exactly the way it is with no improvements to somebody who'll flip it."
That's exactly what Doug Gale intends to do - though that’s not how he'd put it. Gale
concedes the house itself can't be occupied as is - "If it was mine, I'd tear it down" - but
says the land alone is worth in excess of S200,000. "It has faults, but those are tiny
bubbles compared to what can be done with it. Located near two sports complexes
and right across the bridge from Ann Arbor, in ten years, twenty years at the absolute
outside, it'll be a commercial property."
Gale isn't pushing to sell right now, however: "Because of the publicity, we're letting
everything die down. But we'll probably sell as is, probably in the next six months or so -
and probably not back to
Beal unless he shows he has the money. Which, so far, he hasn’t."
As the Observer was going to press, Beal wrote us one last email. "All of this has come
to make me appreciate what I have jeopardized by being so careless with 1960," he
wrote. "I've pissed away the tool I need to be able to do my best work."
(A .pdf copy of the article with
comments by Peter Beal can be
seen here.)
Later, this letter was written as a
critique of the Observer article
and as a brief explanation of the
actual origins of my tax
complexities.