The Virginia-Pilot has a story about a person who built a 2 story structure without a permit and was finally found out by the building department. Despite the fact that I have written extensively about the negative consequences of building without a permit (see my last book, The Building Process Simplified), I am still amazed at the brazenness of people who think they won’t get caught even though they are building something everyone can see! I suppose they hope they’ll get by with a small fine and an apology but will be allowed to keep the illegal structure. While a few might get a variance or pass inspection, many of these structures have to be torn down. Most people who do this are trying to avoid paying for the permits or the other costs of compliance. I have had many of them argue with me in court when they are prosecuted even though the violation is clear. The costs they incur when they are caught far exceed the cost of the permit.
NPR did a story yesterday on how some banks have decided to demolish foreclosed properties in Cleveland and give the land to local government for its land bank because it’s a way to save save the costs of servicing these properties with the added benefit that it helps stabilize the neighborhood. The agreement was described this way:
The Cuyahoga County Land Bank, a quasi-government corporation, offered lenders a deal: We’ll take your worst houses, if you pay to knock them down. This year, Fannie Mae and some of the country’s biggest lenders — including Bank of America, Citibank and Wells Fargo — will help pay for half of the land bank’s 700 scheduled demolitions.
Based on what I’m seeing, it makes sense to demolish these residences sooner, rather than later. I’ve seen homes open to raccoons and water damage that just keep deteriorating. No one is ever going to buy them and fix them up. With the banks sharing the cost of demolition in these circumstances, it becomes possible to stop the trend toward blight in the surrounding community. The vacant land can be used as green space or bought by someone who wants to build a new residence. We’re finding that in some circumstances these properties are more marketable if the derelict house is gone.
Persons who do work without a permit or allow bedrooms in basements that are in violation of the building code risk more than fines. In a tragic case in Ann Arbor, a homeowner’s daughter died along with another person because of a fire in the basement. The owner was charged with renting without a certificate of compliance, illegal occupancy of the basement, inadequate smoke detectors, and inadequate exits from the basement by the local prosecutor. The public just doesn’t understand how building inspectors save lives.
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.
Insurance companies can be allies in the fight for life/safety compliance. They have considerable power over property. If persons insured by the companies don’t live up to the standards of the policy, they may lose their insurance benefits. A judge in Massachusetts has ruled that an insurance company does not have to pay for a fire that occurred at a restaurant because the owner did not properly maintain a fire suppression system. The Insurance Journal reports:
At issue is an exclusion in a commercial lines policy issued to the French King restaurant in Erving, which required the restaurant owner to maintain a fire suppression system. The insurer — Interstate Fire & Casualty Co., a subsidiary of Fireman’s Fund — claimed that the fire-suppression system installed at the restaurant was obsolete, and therefore triggered the exclusion and did not require them to indemnify the restaurant.
The court agreed and ordered the restaurant to pay back the $15,000 advance given to the owner before the investigation was completed. I’ve always wished there was a separate registry of properties and their insurance companies so inspectors could alert the insurance company about dangerous conditions. (I make no comment as to whether this might violate privacy laws in some states). Most owners will act so they don’t lose their insurance unlike the owner in this case. The article said that the owner could have upgraded his system for $3,250. Unfortunately, fire inspectors have to repeatedly try and obtain compliance because of the real threat of fire while some owners only see the extra cost to themselves when asked to comply.
