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?
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.
The New York Post is reporting that the compound built in Pakistan that housed Osama Bin Laden deviated from the building plans on file. It was supposed to be a 2 story building but ended up with 3. An extra building not on the plans also was constructed. The Post says Bin Laden never paid property taxes. It also reported that:
The oversights were no surprise to locals, who say Abbottabad’s building inspectors never bother to check whether homes are built in line with their building permits.
I keep saying that strict code enforcement can aid law enforcement. You just never know what you’ll find when you pursue these cases.
It’s always sad to read about building inspectors who get caught up in the criminal justice system because they commit criminal acts. Los Angeles has a scandal going on because 2 building inspectors were arrested on suspicion of accepting bribes. The Los Angeles Times reports that 2 inspectors accepted $9,000 and $6,000 each from an undercover informant. The informant said that in some cases payment was the only way to avoid delays and to pass inspections. According to court documents, inspectors never even looked at the properties many times. More developments are expected because the informant said that the corruption was systemic.
When an inspector accepts a bribe, it raises the issue as to whether these properties contain dangerous conditions due to this type of corruption. Unfortunately, honest inspectors suffer a loss of respect in the eyes of the public due to this criminal activity.
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.
It’s not unusual for one agency to stumble upon evidence that would interest another department in the local jurisdiction. Firefighters in Columbia, Pennsylvania recently found a marijuana growing operation when they responded to a fire. Police investigated and found plants growing and bags of weed. The police have to be careful before they enter a building though. Unless it’s an emergency (and the destruction of drugs is not usually considered to be one), the police cannot enter a building without consent from the owner or occupant or without a search warrant. Just because an inspector has a right to be on the premises, doesn’t mean personnel from another agency can join him or her. The information uncovered by an inspector can be communicated to the police and used as the basis for a criminal search warrant.
Japan has suffered terribly from the recent earthquake but we will never know how many lives were saved because of the stringent building codes in that country. Unfortunately, not all countries have learned the lesson that if you live in an earthquake prone area, you should obey the local building code. In Quetta, Pakistan builders have been violating the local law by building tall buildings and complexes in violation of a court order. The city has no central building code authority and uses a building code established by Britain after 1935 and 1937 earthquakes. The city was near an earthquake in 2008 that resulted is many lives being lost.
In the past I’ve recommended books on the foreclosure crisis such as Michael Lewis’s The Big Short. Last night I finally got to see “Inside Job”, the film that won the Academy Award this year for best documentary. It methodically lays out how the problem developed, the nature of the crisis and the response by both government and Wall Street.
‘Inside Job’ provides a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused millions of people to lose their jobs and homes in the worst recession since the Great Depression, and nearly resulted in a global financial collapse. Through exhaustive research and extensive interviews with key financial insiders, politicians, journalists, and academics, the film traces the rise of a rogue industry which has corrupted politics, regulation, and academia.
It’s interesting that public employees are being blamed for the money woes in this country when the entire financial crisis was Robin Hood in reverse, steal from the poor (or middle class), and give to the rich. I encourage everyone to rent the DVD of this film so we keep our focus on the people and systems that brought this all about. If we don’t, we will find ourselves in the same situation in the future. Charles Ferguson, the director, said, when accepting the Academy Award, that none of the people in the film have been indicted and no one’s gone to prison. After watching the movie, you’re going to ask “why not ?”
