Local ordinances and rules for recognizing and dealing with vacant and abandoned properties have been around for years.  Albany, Baltimore, Chicago, New Jersey, New York, Los Angeles, Philadelphia, and San Bernardino, to name a few, all have some code, ordinance, regulation, or policy in place for posting and dealing with properties that have been found to pose a risk.  Some regions have had relevant legislation on the books for decades, while others have much more recently written or revised compliance regulations. 

There is no question, however, that this issue and its enforcement have lately become something of a hot button in the industry.  In keeping with our commitment to stay on top of the most salient topics in mortgage field services, Safeguard Properties (Safeguard) has made review of the pertinent legislation and the expectations of local building departments and code enforcement authorities a top priority.

At a 2003 servicing seminar focused on property preservation, Safeguard moderated a panel discussion with participants from various code enforcement agencies around the country and representatives from the mortgage servicing industry.  The panel focused on the vacant building ordinances and abatement procedures in the cities of Chicago, Los Angeles, Philadelphia, and San Bernardino.  City code enforcement representatives from Chicago, L.A., and San Bernardino discussed the specific requirements in their regions and responded to questions and concerns raised by the servicers.

Safeguard distributed a packet of prepared materials concerning a number of ordinances and regulations governing vacant buildings in the cities listed above (copies of the distributed material are available upon request).    

The city representatives also provided a number of useful Web sites that servicers may consult for information about publication of notices and citations, abatement procedures, and appropriate contacts.  Safeguard's list of the Web sites the panel participants referenced, along with a number of other informative code enforcement sites for various cities, is linked at the end of this article.

The city representatives identified the primary reason behind each area's determination to take action to abate vacant buildings: these properties create havens for illegal and dangerous activity, including drug use and distribution, prostitution, arson, rape, and murder.  The cities' first and foremost concern is the safety and well-being of their residents, and the vacant building ordinances and proceedings discussed at the panel exist to help ensure each city's ability to protect its inhabitants.

Each representative outlined their respective city's process for identifying a building that poses a danger, posting citations or violation(s), notifying responsible parties, and abating the nuisance--up to and including demolishing the property--if the responsible parties fail to take remediate action. 

Generally speaking, notice processes are substantially similar in each city:  the enforcement department becomes aware that a property is in violation, whether through a neighbor's complaint, a police report, or a city inspector's finding; the code enforcement department notifies the property owner and lien holder(s), through publication, certified mail, and/or posting on an official Web site; and the city rechecks the property at a later date to ascertain whether the offending condition has been corrected. 

Timelines for city-ordered action and consequences for noncompliance, however, vary widely.  In areas where compliance is most aggressively enforced, the number of days between the city discovering a property vacant and unsecure and the property actually being demolished may be as few as thirty-five. 

Several servicers at recent panel discussions commented on the legal liabilities they face when considering action at pre-sale properties.  The cities representatives all responded to this in the same way: the problem that a vacant building presents must be corrected, and questions about the status of foreclosure or other proceedings will not be considered a defense for failure to abate nuisances or correct violations.

Safeguard's goal, therefore, is to do everything possible to make sure our clients are aware of properties that may be subject to code enforcement action or demolition.  For example, we have for some time offered special "Fast Track" inspection services for properties in high risk areas.  More recently, we've begun to institute processes to review the above cities weekly or monthly listings of properties with posted violations and properties in abatement proceedings, and we're developing the means to cross-reference those lists with our records so that we can immediately notify our clients when one or more of their properties appears on such a list.

A number of city enforcement representatives commented that the best way for servicers to facilitate notice of the need for corrective action at a property is to establish a single point of contact at the servicer's main office, a department or individual familiar with and accustomed to addressing each city's vacant building requirements.  Lenders who have appointed such an expert devoted to managing these issues have found that when the code enforcement departments know who to contact, problem properties are brought to the lenders' attention much more quickly, and the potential for loss is greatly reduced. 

While Safeguard can act as a point of contact, code compliance representatives have indicated that they will still hold the servicer responsible for compliance with the ordinance. Safeguard therefore expects to fill an important role by helping to keep our clients informed of properties at risk, as well as continuing to serve as a reliable source for timely and effective remediation when necessary.

Corrective action, especially where the servicer is concerned about conflicts with ongoing foreclosure proceedings or other legal matters, need not be unduly cumbersome.  Often all that is required is to assure that the property is kept secure, free of debris and health hazards, and generally in a condition that does not create an eyesore or blight in the neighborhood.  A property that does not appear to be vacant and deteriorating, and that is not easily accessible, does not tend to invite the kind of dangerous activity that comprises code enforcement's primary concern.

The degree of interest in and concern about the topic of code enforcement may be experiencing a current surge, but the  importance of maintaining compliance will not diminish any time soon. This is a growing problem, and one that we all have a shared responsibility to attend to.  We invite and encourage all questions, comments, and suggestions about code compliance and enforcement from industry professionals and compliance authorities, and we welcome the opportunity to be an integral part of the servicers and the cities efforts to address an important issue that affects us all. 

Below please find direct audio links to listen to the conference Code Enforcement sessions.

City of San Bernardino 2:25
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City of L.A. 1:24
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City of Chicago 3:36
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City of Philadelphia ( and further comments on above cities ) 38:21
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 Code Enforcement Web Links