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'Devil's House' leaves family fighting foreclosure
EDMONDS, Wash. -- The Nealey family is fighting to save itself and stay out of bankruptcy and foreclosure.
They call their home "The Devil's House," because they never expected their new home would flood, fill with mold and sit just feet from toxic waste.

The 1940s farmhouse near Edmonds in Snohomish County has curb appeal even now. The Nealeys thought this would be their dream home. That is, until the bloody noses, migraines and asthma began shortly after they moved in.

The home is all but abandoned now. A poem's written in magnet words in their eldest child's bedroom. The first five words of the teenager's poem read, "Relax you are a prisoner."

"We thought it was perfect," Julie Nealey said of her first impressions of the house. "It was beautiful and we thought it was going to be our dream house."

There's even a white picket fence and private stream in the backyard of their $360,000 dollar home. Just weeks after Keith and Julie Nealey closed the deal in 2001, heavy rains gorged the steam.

Julie videotaped one of the following floods. You can hear her narrating as water rises in their home. She says, "Now we're flooding again."

The Nealeys say the house has flooded more than a dozen times. Neighbors tell us halls creek has flooded for decades.

"We're just kind of doomed as we sit," Julie says from behind the camera. She points out a black fuzz coating the interior of a basement wall. Julie says black mold festered in the home where she, her husband, three kids and half dozen dogs lived.

"I was shocked," she said. "It almost frightens you. I mean that's pretty bad."

In the middle of the flooding and the mold, years of personal and industrial waste began percolating up from the middle of the Nealey's backyard.

Julie showed us through the thick brush pointing out trash, oil drums and rusted car bodies from an old auto shop.

"The only way it could get worse is if they dug into the property and found a burial site," she said.

"We started having nose bleeds and respiratory infections," Julie said, adding that her kids even started coughing up blood. Her two older children now have asthma.

The Nealeys looked back at the property disclosure statement from their sale and the "no" box is checked for a drainage problem on the property, and "no" is checked again for damage to the house from floods.

"We did all the things you're suppose to do, we had home inspections, our mortgage company did flood determinations, we had a title company look at stuff, no one found anything," Julie said.

The Nealeys sued their home inspector, only to find out their contract allowed them to sue only for what they paid their inspector -- less than $200. The Nealeys also sued the former owners and their real estate company, Wilson Realty.

"You don't assume anything." That's advice from Jeff Downer, who represents real estate agent Wade Heyer and Wilson Realty.

Their insurance company paid the Nealeys $5,000 in a settlement this year.

"It was a good business decision to make, and that's all it was," Downer said. "It was an explicit denial of any liability, because my clients didn't do anything wrong."

The Nealeys signed a hazardous materials form just before closing, but they said they thought that meant any hazards had been removed.

But the family the hazardous material remained.

"They received it, they read it, and signed it" Downer said of the form.

The previous owners of the house, Kenneth and Sari Davy, would only tell me they're shocked by everything that's happened to the Nealey family. Their attorney did not return our calls.

Their insurance company paid the Nealeys $50,000 to settle. More than half the settlement went to pay attorneys.

Julie walks through the house looking at pictures, appliances and furniture now collecting dust, and filling with mold. "We can't take anything with us," she said. "It's all contaminated."

They don't have enough money to tear down and rebuild on higher ground and, and they've run out of money for any other legal action.

The Nealey family moved three doors down with few belongings. "I call it camping, except inside for the long term."

They're still prisoners to a $2,600 a month mortgage.

"For a house we can't live in, can't sell and can't fix," Julie said. Their last, desperate option: "I've contacted the Edmonds Fire Department and asked if you'd do a control burn on this."

The fire department's now considering burning the house down. The Nealeys mortgage company may allow it. But, the Nealeys may still face more heartache.

It could cost them more than $100,000 dollars to clean up the waste in their own backyard. You can find a list of contaminated properties on the state Department of Ecology web site.

The link would not have helped the Nealeys, though. The Department of Ecology says the contamination on the Nealey's property was never reported before the Nealeys called them.

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Date Posted: 2007-07-10  

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