Code Attorney

Once again, Kelly Anbach, a whiz on the internet and inspector in Hinsdale, IL, has found something of interest that I’d like to share.  There is a conference in Washington D.C., the National Property Preservation Conference 2009, put on by the mortgage service industry.  It’s being held November 4 – 6, 2009.  Representatives of the mortgage industry, local government and the federal government are attending.  Here is the link https://www.safeguardproperties.com/register/dc09/?p=1 It looks like it will cover many of the issue we are all concerned about.

After a wonderful vacation in Canada (which never got as crazy with bad loans as the U.S. did), I’m back at the computer.  Time magazine has an interesting article about reinventing the McMansion.  Apparently many of these huge houses have fallen out of favor in this economic climate and rather than let them become bloated blighted structures, some jurisdictions are allowing them to be converted into group homes, film studios, and greenhouses, among other things.  Of course, this would require a significant change in local zoning laws. One of the concerns voiced by a real estate professor in the article is about blight in the suburbs if these houses lose their appeal.  You can find the article at http://www.time.com/time/magazine/article/0,9171,1924506,00.html

Of all of the structures I see without permits in court enforcement actions, decks have to be close to the top of the list. A recent case in Idaho, Wohrle, et al v. Kootenai County, 147 Idaho 267, 207 P.3d 998(2009) ended in a good result for the county. The plaintiffs built decks within the setback area of their properties without permits and without variances. After the fact they applied to the county for variances so they could keep their decks. The county said they hadn’t shown a hardship and denied the variances. The plaintiffs didn’t like that result and sued the county. They ultimately lost their case in the Supreme Court of Idaho because the court found they had not shown a hardship and their substantial rights were not violated. The Court very sensibly ruled that:

Respondents were not making lawful use of their properties when they built within the setback areas without first receiving a variance or building permit. In addition, even with the denial of the variance requests, Respondents are still able to use their property as permitted under state laws and regulations and county ordinances-all of which were in effect when Respondents purchased their properties. Respondents are not entitled to the granting of variances; instead, variances are issued upon the discretion of the Board. They are still able to put their property to reasonable use by using and enjoying a dock on Coeur d’Alene Lake, so no substantial rights have been prejudice.

Too often people on zoning boards feel sorry for the people asking for a variance because they spent a lot of money and it’s going to cost even more to come into compliance with the law. This court recognized that there is no reason to complain or whine if you acted illegally to begin with. Variances are not supposed to be issued because someone will be inconvenienced. In my opinion, the Board did the right thing in this case and so did the Court.

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.

The recent case of Armstrong v. Mayor and City Council of Baltimore, 2009 WL 217867, expanded the definition of  “single housekeeping unit” to include an apartment with four bedrooms  and a common area with kitchen and bath facilities shared by 4 unrelated people, each of whom had a separate lease with the developer. The apartment building was made up of 26 four-bedroom suites.  The City contended that the apartments in the building were rooming units but because the ordinance did not have a strict definition of what constituted a single housekeeping unit, the court did not agree.  The code provided that a dwelling unit may not be occupied by more than one family.  A family was defined as no more than four unrelated individuals who live together.   None of the tenants had access to each other’s bedroom.  It seems to me that the lack of a clear definition of what constituted a “single housekeeping unit” led the court to make its decision.  It highlights how important definitions can be in zoning ordinances.   I had a case where the landlord chopped up a single family home into 3 units with a common kitchen.  Thankfully, the code was clear enough that he was forced to return the home to its single family character after his appeal was denied. Unless a local government doesn’t mind this type of result, it may want to check the definitions in its zoning code.

This does not bode well for reducing the number of foreclosed properties anytime soon now that the foreclosures are spreading to regular mortgages due to the owners’ loss of employment  This article from the Washington Post describes the problem.

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/17/AR2009081703035.html

The National Vacant Properties Campaign has an interesting summary of different approaches being taken around the country regarding vacant and abandoned property. You can find the summary at http://www.vacantproperties.org/strategies/tools.html I especially like the Chula Vista, CA ordinance approach. This is a description if its ordinance.

The Abandoned Residential Property Registration Program is intended to address those properties that are vacant and financially distressed. The program requires mortgage lenders to inspect defaulted properties to confirm that they are occupied. If a property is found to be vacant, the program requires that the lender exercise the abandonment clause within their mortgage contract, register the property with the City and immediately begin to secure and maintain the property to the neighborhood standard.

They must also hire a local company to inspect the property on a weekly basis. The property must be posted with the name and 24-hour contact number of the company responsible for the weekly inspection, maintenance and security of the property. This will remove the City’s Code Enforcement Section from spending limited resources to act as the property manager. It also allows neighbors to have direct contact with a responsible party. It is hoped that the combination of observant neighbors and an accessible local responsible party will deter and arrest any potential deterioration of the property and thus preserve the neighborhood.

This seeks to address the time between the default on the loan and the sheriff’s sale when the lender actually gets title. Here’s a link to the actual ordinance. http://209.242.175.50/weblink7/docview.aspx?id=52169

I was visiting Milwaukee this past weekend when I came across an interesting article in the Milwaukee Journal Sentinel about a case in Florida where a district attorney in northern Wisconsin was litigating with the city of Fort Lauderdale over fines in excess of $700,000 on property worth only $200,000.  His mother had owned the property prior to her death and it had incurred damage due to a hurricane and eventually she ended up with enormous fines due to its condition and the work done without permits.  The son contended the large fines were excessive but the the federal court of appeals recently disagreed with him and stated:

In this case, the fine is properly characterized as a $150 per day fine for each day their house was not in compliance with the Fort Lauderdale Code. The Moustakises do not allege in their Complaint that a $150 per day fine for violating the Code is excessive, only that the cumulative fine of $700,000, which is more than the value of the house violating the Code, is excessive. But the $700,000 fine was created by the Moustakises’ failure to bring the house into compliance with the Code each day for 14 years. Rather than being grossly disproportionate to the offense, the $700,000 fine is, literally, directly proportionate to the offense. The Moustakises have not alleged any facts that demonstrate that the lien and underlying fines are excessive under either the Florida Constitution or the United States Constitution.

Last weekend I went to visit Frank Lloyd Wright’s home, Taliesen in Spring Green, WI.  When you realize that architects were still building Victorian homes when he began working, his genius is truly amazing.  It’s definitely worth the trip.  A person on the tour asked whether Frank Lloyd Wright ever had problems with building inspectors.

The tour guide said that he had, in fact, run into problems with building inspectors over the course of his career.  I did a little research and found some interesting information.  Here is an example from the book Frank Lloyd Wright and the Johnson Wax Building which discusses how Wright submitted to a load test for the “petals” holding up the structure. The state inspector required it to hold 12 tons.  That wasn’t good enough for Wright. (He had a very large ego).  Wright continued to have more weight added to the top.  The “petal” ended up holding 60 tons.

http://books.google.com/books?id=RalDFRIwofgC&pg=PA62&lpg=PA62&dq=Frank+Lloyd+Wright+and+building+inspectors&source=bl&ots=IffRCAO7dS&sig=qJo78FBSAgdweLa5WAUvr5DwvUU&hl=en&ei=9iSCSsWnC42AMsH2mZQL&sa=X&oi=book_result&ct=result&resnum=6#v=onepage&q=&f=false

Building officials have the power they need to work with geniuses like Wright by approving alternative methods of construction, design and materials under IBC 104.11 if the intent of the code is met.  Many inspectors are dealing with green technology and using this provision to approve techniques and materials that were unheard of 50 years ago.

Remember how I’ve mentioned before that it’s hard to find the actual lender for these securitized loans because thousands of investors actually can own a mortgage on a property?  The “lender” inspectors usually deal with is actually the trustee for the securitized note and not the real lender.  For example, you may be dealing with Wells Fargo who is the trustee for Lehmann Brothers securitized note XXX.  Wells Fargo is not the lender; it’s just taking care of the true investors’ interests in the note.  Apparently this is why so many people are having trouble getting a loan modification.  They’re running into the same problem.  Here’s an interesting article that describes the problem:

http://www.huffingtonpost.com/propublica/analyzing-the-loan-modifi_b_253890.html