Larry Schooler writes in his April 7th blog of the problems presented by abandoned and vacant buildings. The blog discusses the problem in Texas but in truth and in fact the issue of abandoned and vacant buildings is popping up nationwide as the housing slump continues and foreclosures are on the rise. The national focus has been on irresponsible banks lending to individuals without requiring proof of income or ability to pay. The national focus has been on irresponsible individuals stretching to get into a home that is well beyond reach.
While the nation focuses on the big picture, local governments are realizing that the foreclosure crisis has an insidious effect on their budget and politics. When the neighbors move out because they bought more house than they could afford, the house sits vacant and in limbo for months and months and months (get the picture??) at a time. The bank may not “own” it. The neighbors may “own” it but they are long gone. The mortgage servicing company may not “own” it. Certainly the city or county does not own it but whose phone starts ringing when the neighbors’ yard is overgrown or the pool enclosure has been breached or the fascia is falling off? You guessed it, your friendly code enforcement department’s phone is ringing off the hook right now. Foreclosures have very much become a local government code enforcement nightmare of epic proportion.
The hammer for code enforcement departments is the ability to assess a fine against the property while the problem remains uncorrected. That fine becomes a lien once recorded. The problem with this tactic is that the overgrowth problem or pool enclosure problem or fascia problem remains – unsightly, for sure, but also a drain on neighboring properties’ value, henceforth, all the complaints. Then, when, and if, the property sells, there may or may not be funds enough to pay off the lien. Or when a buyer magically appears, they come begging to the local government for forgiveness of the lien since they were so kind as to take on the unsightly property.
Another option is for cities and counties to fix the yard overgrowth, pool enclosure or fascia and asses the costs of repair against the property. This is all well and good but when there is a “short sale” there is not excess money and the local government is left holding the tab serving in effect as a property maintenance bureau for abandoned and vacant homes. Is this really a government function?
I have heard of the mythical “super-lien” whereby code enforcement departments can lien a property and that lien takes priority over all others but my lawyerly red flag goes up each time I ponder such liens. Can they possibly be enforceable?
We are in the midst of government bailouts but don’t think those are limited to our federal government. Local governments are doing their fair share of bailing out too and just ask your local code enforcement department, there is no end in sight.