A young woman lost her life in Chicago recently during a fire. The fire began in a unit in a high rise apartment building, the residents fled the fire but left the door open so one of their pets could escape, the unsuspecting woman took the elevator up to the floor where the fire had spread, and was overcome as soon as the doors opened up. The building did not have sprinklers, a fire alarm system or an automatic recall elevator system according to ABC news in Chicago. The City of Chicago had delayed forcing older building to conform to the fire code by extending the time for compliance in its ordinance. In an interesting development, the State Fire Marshal cited the building owner for 19 violations of the fire code including the above violations which violate the Life Safety Code. Building owners are now arguing that they are confused over which law to follow. The State of Illinois has adopted the Life Safety Code as its state code. Chicago has home rule powers but that doesn’t exempt buildings from following state law unless state law grants such a waiver. Unfortunately, Illinois is hodgepodge of laws. We don’t have a state building code. Local governments basically adopt whatever they deem proper for the locale though most of the cities and villages I know of do adopt the Life Safety Code in addition to the IFC as their local ordinances. The caselaw in this area uses a balancing test weighing the cost of the upgrades versus the safety of the public. The safety of the public usually prevails which is why owners can be forced to retrofit their buildings. We know what prevents loss of life in fires but the outcry from building owners that delay upgrades due to the cost too often results in loss of life.
I received a request that I post this question for all of my readers to answer. Do any of your jurisdictions have an ordinance allowing you to shut down a business if it is occupying the space without a certificate of occupancy? Certainly if the work is hazardous, an inspector can use emergency powers to do so. However, most of the cases don’t fall into this category. The way I usually handle those cases is to recommend that the inspector ticket the owner every day the business remains open. If that doesn’t work in a couple of days, the inspector starts giving tickets to the managerial staff, and if that doesn’t work, the inspector gives tickets to the employees (it doesn’t usually go that far). In Illinois, a defendant who commits an ordinance violation can also be arrested. I actually had a case where we gave the person a ticket in the morning, told them not to reoccupy the space, and then arrested him in the afternoon when the inspector found the business still operating. If anyone has something to share, I will post it and give you credit.
A very worrisome lawsuit has been filed by the Federal Housing Finance Agency which oversees Fannie Mae and Freddie Mac, against the City of Chicago which recently passed an ordinance that requires mortgage holders to register vacant buildings 30 days after they become vacant or 60 days after a mortgage goes into default, whichever is later, pay a registration fee, keep the premises free of weeds or trash and make sure they are structurally sound.
The lawsuit says that:
….the city’s ordinance encroaches on the FHFA’s role as the sole regulator and supervisor of Fannie Mae and Freddie Mac. It says Chicago cannot mandate how the agencies handle vacant buildings for which they are the designated mortgagee.
The problem is that Fannie Mae and Freddie Mac own about 258,000 mortgages in Chicago so a considerable number of vacant structures would be unregulated if the lawsuit succeeds. Illinois law makes it almost impossible for a municipality to cut weeds, fix up property and add the costs to the property tax bill. This has really hampered our ability to address problem properties which is why ordinances like the one in Chicago are so important.
The Chicago Tribune has taken on lenders over the devastation that has befallen neighborhoods while they sit back and let property deteriorate. I’ve noticed a phenomenon in my practice when I’ve researched properties in foreclosure that have code violations. Lately I am seeing more and more foreclosure actions that are stalled after the lender obtains a judgment of foreclosure. No sheriff sale takes place or the sale is canceled. The lender doesn’t take the steps to get the deed and tells the local government that it’s not responsible for the property even though the owner is long gone. The article in the Tribune discusses the consequences of such business practices:
Such legal maneuvers by banks, which in many cases either walk away from properties that aren’t worth selling or let foreclosure proceedings languish in an overwhelmed court system, have left thousands of dilapidated vacant houses in ownership limbo citywide.
At the same time, the financial industry is fighting against proposed legislation in Illinois that would make it responsible for the upkeep of a property once a foreclosure suit has been filed if the property is vacant.
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.
