Commercial building foreclosures are going to be a big problem in 2010. Many communities already have these “zombie” buildings which were built during the good times but have stood empty or half-built. In some situations, inspectors I work with are going forward with demolition lawsuits or condemnation. Others just remain empty hoping for better days. This link contains an interesting video on the problem. http://www.huffingtonpost.com/2009/11/20/zombie-buildings-are-they_n_365400.html
Too often purchasers of property do not do their due diligence to check for potential problems with the land or the building. This seems to happen quite frequently when property is located in a flood plain. I’ve had cases where people build bridges over creeks without a building or storm water management permit, use a bulldozer to move dirt around without a grading permit or buy property at a tax sale that later turns out to be a retention pond. Of course, they want a permit to build on their new property. In a case from Louisiana (Lafleur v. Blue, 6 So.3d 348(2009)), a purchaser learned the hard way that he should have investigated the property more thoroughly. After owning property for a number of years, he decided to sell it. However, a potential buyer discovered that it was in a floodway. Up until that point, the owner, failed to do his research. He then sued the local government agency for not indicating on the plat that part of the lot was in a floodway. The plat did show the lot was in a flood zone. The court said the owner should have researched the property “a little more” and decided against him.
While preparing for a workshop I’ll be doing on 11/3/09 at the College of DuPage, Suburban Law Enforcement Academy, on the relationship between law enforcement and code enforcement, I came across a very informative publication at the website of the National Vacant Properties Campaign entitled Vacant Properties: the True Cost to Communities. You can download it at http://www.vacantproperties.org/resources/reports.html It contains research on the relationship between crime and vacant and abandoned properties in neighborhoods along with a very good bibliography.
People who purchased houses with Chinese drywall (the kind that has been linked with a rotten egg smell and corrosion) are running into a problem when they file a claim with their homeowners insurance companies. Many of the companies are denying the claims because it’s considered a building defect and then canceling the policies until the problem is fixed. Because people need to keep insurance on the home as a condition of the mortgage, this could cause them problems with their lenders. It’s a sad situation, especially in this economic climate. You can read more about it at http://www.comcast.net/articles/news-national/20091015/US.Chinese.Drywall/
Inspectors in communities with high end homes should be vigilant in light of a recent Wall Street Journal article. http://online.wsj.com/article/SB125530360128479161.html?mod=rss_US_News Foreclosures are rising in the top end of the market and decreasing at the lower end. Many of these homes had exotic mortgages that allowed people to defer paying the principle. Now, however, they can’t refinance their way out of huge payments when the mortgages reset. I’ve seen this happen in my local community. My husband and I could never figure out how all of these young people with small children could afford the McMansions that were being built. We always wondered where the huge incomes came from to go along with the huge mortgage payments. I realize now that many of them were refinancing their way out of problems. Police officers told me that many of them were only half furnished. People were viewing homes as an investment instead of shelter. When the loan reset, it was time to refinance. But, a year ago the “music” stopped and owners couldn’t get a new loan, especially with home prices going down. That’s when the “For Sale” signs started appearing. We’ve seen a number of these behemoths sitting now for a few years without a sale. It’s a trend to keep on top of which is why I like vacant building ordinances.
There is an interesting map that show the distribution of foreclosure properties throughout the United States. You can find the map at http://data.newyorkfed.org/creditconditions/ It is courtesy of the Federal Reserve Bank of New York. California and Florida are still the worst states for these types of properties. What’s especially useful about the map is that you can click on a county and it will show the data for that location.
I had a wonderful trip to Colorado recently teaching Advanced Legal Aspects for Building Officials (and my husband and I took some time to go sightseeing). One of the building official’s told me that in the area he was from, roofing contractors had swarmed through a neighborhood hit by a tornado. The contractors wrote down the addresses of the homes that obviously needed repairs because of the storm. The contractors then went to city hall and pulled permits without the knowledge of the homeowners. The contractors would go the owners saying they were ready to begin work and had the permit in hand. If the owners refused to allow them to do the work, the contractors would try to get their money back from city hall. It’s important to remember that a permit is given to a contractor because he or she is the agent for the owner of the property. The local jurisdiction can an
d should require proof of that agency to avoid this type of outrageous behavior. This can be achieved by having the owner sign the permit in addition to the contractor or by requiring a copy of a signed contract as part of the permit application.
There’s a sad tale from Jacksonville, Florida about a woman who was found dead under 8 feet of trash in her home. http://abclocal.go.com/ktrk/story?section=news/national_world&id=7054060 The rescue workers had difficulty locating the body because of the trash. There’s an ongoing debate about how aggressive inspectors should be in enforcing the property maintenance code for interior violations. Should a person be allowed to live in a “trash” house if he or she is not harming anyone else or should inspectors seek compliance against the wishes of the occupant? I think this case points out the dangers of ignoring these kinds of cases. As I’ve said before, I’ve had some success by having the court issue an order for a cleanup with an inspector monitoring the progress. Don’t we have an obligation to use the law to help people who because of a hoarding disorder can’t help themselves?
Tom Pahnke, an inspector for Manhattan, IL, commented on my recent post about people selling things out of their foreclosed homes. His town has a best practices procedure that includes the police department in monitoring these homes. He even notified an attorney for a lender when he noticed people offering items for sale on Craig’s List. The attorney was able to get a restraining order. Tom said he routinely looks at Craig’s List and local papers to see what’s going on. Tom has generously offered to share a copy of his handout/presentation with anyone who’d like to contact him. He can be reached at tpahnke@VillageOfManhattan.org.
The Chicago Sun-Times has an interesting article in the paper today about how many homes are being stripped of everything before the lender takes possession. Certain items are considered part of the real estate. Those items are known as fixtures. A fixture is normally considered to be any physical property that is permanently attached to real property (e.g. molding, countertops, toilets etc.) so aren’t supposed to be removed when people lose their homes. http://www.suntimes.com/news/metro/1792042,CST-NWS-strip27.article I’ve heard this is going on all over the country to the extent that some lenders are paying people facing foreclosure to leave without damaging the property. What caught my attention is how difficult it is to prosecute the guilty party. As a former assistant state’s attorney I know how challenging it can be to prosecute someone for criminal damage to property or theft unless there is an eyewitness. While some guilty parties may confess when confronted by the police officer investigating the case, suspects often know that there is no way to prove the case against them without an admission of guilt. Just because they had the opportunity commit the damage or steal doesn’t mean a prosecutor can prove it beyond a reasonable doubt. Many times vandals strip empty houses so it’s not necessarily the former homeowner who is the perpetrator. It presents a real dilemma for the police as well at the lender. Of course, if an officer finds the former homeowner listing the old kitchen cabinets on Craig’s list, that case has possibilities.
