The Chicago Tribune has taken on lenders over the devastation that has befallen neighborhoods while they sit back and let property deteriorate. I’ve noticed a phenomenon in my practice when I’ve researched properties in foreclosure that have code violations. Lately I am seeing more and more foreclosure actions that are stalled after the lender obtains a judgment of foreclosure. No sheriff sale takes place or the sale is canceled. The lender doesn’t take the steps to get the deed and tells the local government that it’s not responsible for the property even though the owner is long gone. The article in the Tribune discusses the consequences of such business practices:
Such legal maneuvers by banks, which in many cases either walk away from properties that aren’t worth selling or let foreclosure proceedings languish in an overwhelmed court system, have left thousands of dilapidated vacant houses in ownership limbo citywide.
At the same time, the financial industry is fighting against proposed legislation in Illinois that would make it responsible for the upkeep of a property once a foreclosure suit has been filed if the property is vacant.
Thirteen percent of U.S. homes are now vacant according to a new report in the Huffington Post. Prices are dropping but people who have the money to buy are reluctant to enter the housing market fearing prices will drop even more. I think we’d hope that by now things would turn around but I’m not seeing much change in the areas around the country where I do seminars. I’m very concerned about properties that still appear to be owned by individuals but that the lenders actually own. Recently I was researching a property that the former owner told us he turned over to a lender last summer. He was right. We didn’t know though because the lender had never filed the necessary paperwork with the Recorder of Deeds. Consequently, all notices of violation went to him and not the lender. Whether this was an oversight or intentional, I have no idea but it sets us back even further in identifying the responsible party. I’m also seeing a number of judgments for foreclosure where the sheriff”s sale has never taken place. Sometimes this is due to a bankruptcy being filed but in other cases it remains a mystery. This is why ordinances to make lenders responsible for the upkeep of the vacant property prior to a foreclosure judgment are so critical to preserving neighborhoods.
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?
There’s a very sad story about the death of a worker in New York City at a development owned by someone who keeps getting sued by the city and yet no one seems able to prevent him building shoddy structures. One quote that caught my eye was:
Spokesman Tony Sclafani said the department has no authority to deny or revoke permits based on previous safety violations or unpaid fines.
It got me wondering about whether there are jurisdictions that do have laws that deny building permits to builders who have unpaid fines or previous safety violations. I’d love to hear from someone who has such an ordinance so I can share it with the readers of this blog. I realize that builders will just incorporate under different entities to avoid such a penalty but even that could be addressed in an ordinance (e.g. based on someone’s percentage of ownership).
It always disheartens me when an important rental inspection ordinance encounters opposition. Based on personal experience, I am convinced that a well executed ordinance can prevent buildings from becoming blighted and can protect tenants from negligent landlords. I was recently reading about a town that adopted a less stringent rental inspection program. http://adirondackdailyenterprise.com/page/content.detail/id/521399/Village-adopts-milder-rental-inspection-plan.html?nav=5008 The town decided not to make owners register rental property. The problem with this approach is that the most effective rental inspection programs require that the owner has a license or permit to rent the property. If the property does not meet minimum code standards, the property cannot be rented until the problem is fixed. Regular inspections are part of the program. If an ordinance is watered down, the inspector has to keep sending notices of violation and citations to the owner while the owner continues to collect rent from the tenant living in substandard conditions. While eventually, the court will order the owner to comply, those owners covered by a rental licensing ordinance seem to comply more quickly. Once landlords become used to a rental inspection ordinance, they tend to do a better job of making minor repairs so large ones don’t become necessary. An inspection program is often considered as part of a crime-free housing ordinance. I’ve been helping local governments understand the benefits of rental inspection programs by making presentations at workshops and board meetings. Sharing my experience with people who are concerned about reducing crime and preserving property values is very rewarding. As more and more owner occupied properties turn into rentals, strong rental inspection ordinances become vital in preserving the quality of life in a community.
Inspectors often get frustrated with how slow demolition suits proceed through the court system under their state statutes. Most states establish a a strict procedure that must be followed before a building can be torn down. Some local authorities adopt the International Property Maintenance Code as their ordinance. The IPMC contains Section 110 which describes the procedure to be followed when that code is used. The code official can order the removal of a structure that is so dilapidated as to be dangerous, unsafe, insanitary or otherwise unfit for human habitation. After the proper notice and order have been served, the code official can cause the structure to be demolished or removed if the owner fails to comply with the demolition order within a specific time prescribed and has not appealed the order. There is no involvement of the local court unless an appeal of the order is filed. One of the concerns that municipal attorneys have is whether state law preempts local ordinance procedure in these kinds of situations. A recent case in Illinois supports the position that a municipality is not precluded from using a procedure established by a local ordinance instead of the state statute where there is no language in the state statute that indicates it is meant to preempt the use of local ordinances. In Village of Northfield v. BP America, Inc., 342 Ill.Dec. 827(2010), an abandoned gas station was located on a parcel of property. The Village of Northfield issued a citation against BP America because the property was a public nuisance under its local ordinance. The local ordinance requires an abatement of the nuisance, including the possibility of razing the structure. When BP did not comply, the village filed a lawsuit against it and the court found it to be in violation and issued a daily fine. BP argued that it was not required to pay a fine because the local ordinance was preempted by the Illinois Municipal Code. The court found that BP was correct because the state law preempted the local ordinance. The Village of Northfield appealed the decision. The Appellate Court found that there is nothing in the state statute that specifically limits a municipality’s ability to regulate an abandoned building to the procedures provided for in that section of the Municipal Code. Therefore, the village nuisance provision was not preempted by state law. This decision only applies to Illinois cases, specifically in the First District, but courts in other states may look to it for guidance if such an issue comes before their courts on the same issue.
It’s that time of year again when I get questions about notice to offenders who don’t cut their grass. Some of the inspectors complain that owners of property rely on the notice the local jurisdiction sends them as a signal that it’s time to mow their lawn or property lot. The most frequent question I get is whether one notice is sufficient or whether a notice needs to be sent every time the property needs to be mowed again. It all depends on what your code says. If the code requires a notice before you can write a ticket, then that’s what you have to do. Owners take advantage of this because they cut the grass after they get the notice and before you can write a ticket. Then they wait until the next notice, cut the grass and wait until the next one. This really wastes the inspectors’ time. My suggestion is to amend the code’s notice provision (if you can do that depending on state and local law) so that one notice per season is sufficient. There’s no good reason any inspector should play babysitter to a landowner. The owner needs to supervise the property or pay the consequences.
I recently did an all day training for the Illinois Fire Inspectors Association and I found myself talking about using multiple codes for violations. Fire inspectors often work with both the IFC and the Life Safety Code and have to decide which one to use. I find that the IFC has superior administrative provisions and gravitate towards it for enforcement. The Life Safety Code is a great code to follow when something is being constructed. Beyond that, I sometimes find that using the IPMC is helpful when dealing with a problem property because it has very specific sections on the condemnation of unsafe buildings, structures and equipment. In some jurisdictions, the building department writes the violations for the fire department or fire district. In those cases, I’ve often seen the inspectors use Chapter 7 of the IPMC for fire code violations since it’s fairly comprehensive for common fire safety violations. Ultimately it doesn’t matter which code you use as long as it’s appropriate to the situation and it meets the local requirements of your jurisdiction and state. Being flexible is important because you may find that you hit a dead end using one code but the solution lies in another. When I wrote the guide books for the IBC, IFC and IRC, I included a chapter on using the IPMC when unsafe structures were involved. The IBC and IFC have some guidance for unsafe buildings but not to the point of condemnation. The IRC has nothing about unsafe structures. Now that there are many half-built single family structures standing around, this becomes a problem since the IBC doesn’t apply to them. I usually recommend using the IPMC (if you have adopted it) if the permit has expired. If you don’t hve the IPMC, you better have a decent public nuisance ordinance. Otherwise, the only alternative is a demolition lawsuit which in most jurisdictions can be a costly procedure.
I can’t stress enough how important it is to have definitions in ordinances that are clear and understandable. Recently I tried to help out a friend who was letting a sibling live in a residence she owned while he got back on his feet financially. There was no rent being paid but the relative was picking up the cost of the utilities. The town where this residence was located had a rental inspection ordinance so my friend received a notice from the local jurisdiction demanding she get a rental inspection. The town exempted residences that an “immediate family member” lived in from the ordinance. However, it did not define what the term “immediate family member” meant. It took the position that only children and parents of the owner were entitled to an exemption. Yet, if you look at general definitions as to what constitutes an “immediate family member”, some include siblings and some do not. When a definition is vague in the law, the party who has written the definition does not get the benefit of the ambiguity. Court decisions on this issue rely on the definition contained in the law. If there is none, the court should choose the most liberal interpretation of the term. I pointed this out to the inspector but she knew that it was cheaper for my friend to pay the inspection fee than try to litigate the issue. All of this could have been avoided by drafting a proper definition so anyone could tell exactly who was responsible for following the ordinance. I’m a big supporter of rental ordinances but I want ordinances where I’m not going to have to litigate over the terminology.
