Code Attorney

There’s a bill pending in Illinois which would allow local governments to pass ordinances that would make lenders responsible for the upkeep of vacant properties in foreclosure.  Needless to say, the lenders are fighting the bill.  They’ve proposed a $50 fee per foreclosure that would go into a pool that local governments could draw from to reimburse themselves for their costs.  $50 per property, hmmmm, that’ll go really far. Maybe it’ll cover half a lawn being cut, once.   They must really think we’re stupid.  I’m disheartend that when I contacted my state rep, I received a nice “thanks for your e-mail” message, completely ignoring the expertise on this issue I’ve developed.  The banks say that they just wouldn’t be able keep up with all of the municipal ordinances that might be passed; maybe they would then know what it’s like to be an inspector who is desperately trying to reach a live human being at a lender when a property has 6 feet of water in the basement of a vacant home under foreclosure.  I wish I wasn’t so cynical about the political process.  I wish I believed it was possible that politicians would do the right thing and help local government preserve neighborhoods.  I want to believe that if they only knew about the problems we face, they’d give us some meaningful tools.  But, if they ignore our attempts to educate them, how can they make an informed decision?

Building officials are dealing with structures that have not been completed within a reasonable amount of time.  Many of these situations arise because of the financial problems of the owner or contractor and sometimes these projects are begun by weekend warriors who never have the time to finish the project.  Shorewood, Il. building inspector, David Meyers, shared the ordinance his town has used to try and deal with this problem:

1. New Construction Permits; Residential Dwelling Units:

a. All work must commence within six (6) months of the issue date of the permit. If work has not commenced within six (6) months, the general contractor may request that the original permit be extended by ninety (90) days. The request shall be made in writing and include an explanation for the delay. All extension requests should be submitted to the village administrator.

b. The dwelling unit is required to be completed and successfully pass a final inspection by the building inspector within twelve (12) months from the issue date of the permit. If the dwelling unit is not completed within twelve (12) months, then the permit applicant must reapply for a new permit. The reapplication cost will be based on fifteen cents ($0.15) per square foot of the dwelling unit.

Construction of the dwelling unit must be completed within two (2) years from the date the original permit was issued or court proceedings will commence.

2. Other Permitted Construction:

a. Additions to residential dwellings shall be completed within twelve (12) months. If work is not completed at this time, the applicant must reapply and pay a permit fee that is fifty percent (50%) of the original permit cost.

b. All permits, other than those listed in subsections C1 and C2a of this section, shall be completed within six (6) months of the time of issuance of the permit. If the work is not completed at that time, the permit holder must reapply for the permit at fifty percent (50%) of the original permit cost. (Ord. 98-894, 2-24-1998)

The above ordinance at least sets some limits on how long a building permit stays open.  When a project has an expired permit, I encourage inspectors to use the International Property Maintenance Code to address problems on the property.  This will usually inspire the owner or contractor to renew the permit and complete the project.  If this doesn’t work, we may have no choice but to file a demoliton suit so the unfinished structure does not remain an eyesore.

I recently completed a 2 month period of travel all over the Midwest doing trainings for building officials, fire inspectors, property maintenance and housing inspectors and law enforcement officers in Columbus, Ohio, East Liberty, Iowa, South Bend, Indiana, Troy, Michigan, East Peoria, IL and Sheboygan, Wisconsin.  All of them are facing challenges because of the foreclosure crisis and are trying to respond with reduced resources.  I want to say how much I appreciate the hospitality I received wherever I went and the enthusiasm of the participants.  It gives me great hope when I see the number of inspectors who take the time to come to the classes I teach so they can enhance their skills and keep trying to improve their communities.  At a time when so many public employees are feeling unappreciated and under attack, I just wanted to extend my thanks to everyone who made my trainings a rewarding experience.

Should lenders allow buyers to purchase a foreclosed building for less than what the lender can get for the property so the buyer has enough money left over to fix it up?  That’s the question posed in an article in the Wall Street Journal, Tenants Turn to Lenders to Repair Buildings.  Some housing groups are pressuring lenders to do this because it does no good for a building to change hands if the new owner can’t bring the property up to code.  It’s a novel approach to the problem of deteriorating properties.

One of the most difficult situations I deal with as a prosecutor is trying to find someone to take responsibility for a property where it is in foreclosure, the owners have abandoned the building and the lender fails or refuses to complete the foreclosure process.  Some nonprofit organizations are stepping in under those circumstances and using state laws on abandoned properties to take them over, fix them up and then sell them.  One such organization is featured in an article in the Huffington Post.   Unfortunately, in some states, the waiting period for action is lengthy.  While the clock is running, the property continues to deteriorate.  It is shocking to me that legislatures fail to address the problems these derelict properties create for communities and local government.  Far too often state law protects lenders from having to take possession of these properties and maintain them prior to the foreclosure judgment even though the owners are no longer around and the mortgage document gives the lender the right to ask for possession.  These nonprofits that take on this difficult task should be applauded for their efforts but there aren’t enough of them to make a dent in this horrendous problem.

The New York Times has a story about a new website that tracks slum landlords in New York city.  Tenants can find out about any landlord’s portfolio by clicking a link, “NYC’s worst landlords,” on the apartment search pages on Craigslist.  Bill de Blasio, who is a public advocate in New York has launched NYC’s Worst Landlord Watchlist. The list will track irresponsible landlords and enable tenants to report bad landlords. Sometimes we underestimate the power of bad publicity.  In one set of cases I was involved in, the municipality issued press releases directed to the hometown newspaper of landlords who were renting without a license because of code violations in their buildings.  Nobody likes to see themselves in the local police blotter.  I was surprised how quickly some tenants received attention once names got in the newspaper and embarassed the negligent owners.

Is your city included in this list: http://www.huffingtonpost.com/2011/03/30/foreclosures-ghost-towns_n_840663.html#s259246&title=Cleveland_Ohio ?  It shows us that the crisis is not behind us yet and we’re going to continue to have problems for a long time. If you have a similar situation, let me know how you’re coping with it.

I was recently contacted by someone who is gathering data on the housing market with a special interest in the health of condominium associations.  He was concerned that many of them, especially those that are recent conversions, are struggling financially as more and more units are subject to foreclosure.  This raises problems for inspectors.  If an association falls apart. who is responsible for common area problems?  I’ve had this situation happen a number of times, especially with fire code problems and building code violations.  The first question that needs to be answered is how is title held regarding the common area in a condominium development?  In some developments the title is held by the condo association but in others, each unit owner owns an undivided share of the common area.  After that question is answered, the next one is: what does the declaration of condominium say about who or what is responsible for the upkeep and repair of the common area? Typically the association is responsible.  If the association owns the common area and is responsible for its upkeep, the answer is easy.  I tell the inspector to notify and cite the association if necessary.  I’ve known some jurisdictions that have even helped associations get reinstated that had lapsed.  However, if the common area is owned by the individual unit owners, it gets trickier.  If the association is responsible for the upkeep under the declaration, then it is in control of the property and is considered an “owner” under the IPMC.  However, if the association doesn’t exist, who does the inspector pursue?   In that case, all of the owners are responsible and should be notified and cited if necessary.  This can be a huge undertaking in a large condo complex.  Sometimes following this procedure stirs up the unit owners enough to form a working condo association. It’s far easier dealing with one entity than multiple owners and the local jurisdiction should encourage the owners to follow the condominium declaration and form a viable association.

No better case can be made for rental inspections than when a terrible fire happens.  In San Bernadino, California, 26 dwelling units were destroyed in a fire.  When inspectors went back to check out the remaining units, over 50 code violations were found including exposed wires and other electrical problems.  There were also building code violations including illegal construction and property maintenance issues. Yearly inspections uncover these problems before they become troublesome.  It’s fashionable to rail against government intrusion and landlords convince their tenants they shouldn’t cooperate with building inspectors but this is an area where we know people will die if they don’t have an outside party advocating for their safety.  It’s all about saving lives.

It’s always heartening to see a city realizing that aggressive, not passive, code enforcement is what is necessary  to protect communities.  The New York City Department of Housing Preservation and Development (HPD) announced a new initiative, the Proactive Housing Preservation Initiative.  The ANHD Inc. website reports:

This agency shift from its old passive method of enforcement to more aggressive monitoring of building code compliance means that housing maintenance code violations, like leaky roofs, excessive vermin, etc., should be spotted much sooner. Furthermore, outstanding violations, which often remain unfixed for extended periods of time, should be remedied much more quickly with a more aggressive HPD monitoring the landlord’s efforts to clear the violations.

The problem is that too often these initiatives come into being because the problem has gotten so bad, and the buildings so dilapidated that it’s terribly difficult to get the property rehabilitated.