A Better Alternative to Vacant Property Ordinances
Robert Klein contributes an article entitled A Better Alternative to Vacant Property Ordinances to the February 2012 issue of HousingWire magazine.
A better alternative to vacant property ordinances
States should accelerate foreclosures on abandoned property to address blight
KEY CONCEPTS
Chicago and Las Vegas passed ordinances to require lien holders to maintain and secure vacants.
Only ownership and possession gives lien holders the legal authority to completely accept that responsibility.
Vacant property registration ordinances aren’t new. Many cities have had property ordinances in some form on the books for years. But they were rarely enforced until the housing crisis took hold a few years ago.
With the collapse of the housing market came a slew of vacant and abandoned properties. Out of frustration, when cities couldn’t find a party to hold responsible for the deteriorating condition of properties, vacant property ordinances came into vogue. Thus, when homeowners abandon their properties, cities attempt to make the lien holder accountable for the upkeep of the property.
On the face of it, vacant property registration ordinances make sense. Initially, their purpose was to help cities collect current and accurate contact information about the lien holder of record when public information is lacking, which allowed cities to issue prompt notification when a code issue occurs.
But as cities have continued to struggle with the growing burden of foreclosed properties, their approach to vacant property ordinances has become much stronger. Chicago and Las Vegas are two prime examples, both of which passed aggressive ordinances in 2011.
As originally proposed, the Chicago ordinance attempted to define the lien holder as the homeowner prior to the foreclosure sale. To the city’s great credit, it listened to the concerns of mortgage servicers and investors, and ultimately passed a version last summer removing the homeowner definition, but still requiring that servicers maintain and secure properties prior to the foreclosure sale.
The Las Vegas ordinance passed in December is similar to the one Chicago ultimately passed. Both require lien holders take responsibility for maintaining vacant properties prior to foreclosure and impose stiff fines and penalties for failure to do so.
It is understandable that in the absence of a homeowner, cities would like lien holders to step in and assume the homeowner’s role to care for properties. The problem is, prior to foreclosure, the lien holder’s rights to protect a vacant property are limited, even when the homeowner abandons the property.
Legally, a lien holder can only take steps to avoid code violations and protect the collateral value of the property. In other words, they can mow the lawn, remove yard debris and potentially hazardous materials inside and outside the home, winterize plumbing, remediate roof leaks and secure windows and doors. They must, however, leave the house accessible to the homeowner prior to foreclosure — even if the homeowner has abandoned the property and is no longer maintaining it.
Meanwhile, as properties await foreclosure, even with the billions of dollars the industry spends each year to inspect, maintain
and secure vacant properties, they will deteriorate. A large percentage are vandalized, with the properties stripped of copper pipe, aluminum siding and other materials that can be sold for scrap. Prior to foreclosure, the lien holder has limited standing to make repairs. In many cases, by the time a property moves through foreclosure, its value is virtually gone.
In Illinois, for example, the foreclosure process can take a year or longer. In Nevada, it is six months or more. In some states, foreclosures can take up to two years.
Safeguard Properties currently tracks the existence of nearly 700 ordinances, each with its unique requirements, fees, fines and penalties. In all, the goal of the ordinances is the same — to find a way to protect vacant properties and the neighborhoods that surround them. However, by enacting vacant property ordinances as the only way to accomplish that, cities in states with lengthy foreclosure timelines are shining their flashlights in only one corner of a dark room.
If municipalities really want lien holders to take full responsibility for vacant and abandoned properties, they need to compel their state legislatures to adopt laws that would accelerate foreclosure proceedings for vacant properties that have been abandoned by homeowners.
Only ownership and possession gives lien holders the legal authority to completely accept that responsibility.
With the ability to take possession of vacant properties while they are still in reasonably good condition, lien holders can do what is necessary to make them viable family homes once again.
Cities will have fewer code and nuisance issues to concern themselves with. Vacant properties will be less vulnerable to damage. And the value of surrounding properties and the integrity of neighborhoods will be protected.
Isn’t this really what all of us want?
To view the online article, please click here.
About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 800 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.
