Monday, November 28, 2011

When Houses Become Widgets

What can cities do when limited-liability entities start buying up distressed properties as investments and then ignore basic maintenance?  Pittsburgh provides a cautionary tale:

[I]t has proved impossible to pin a fine on an obscure investment fund that has purchased 1506 Dagmar Ave. and then allowed the modest house to become overgrown and structurally suspect.

Steve Clowney

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The City of Cleveland and its Municipal Housing Court has been fighting the plague of post-foreclosure speculation in unmaintained housing for more than a decade. See the article in the next edition of Shelterforce, published by the National Institute of Housing. New legal tools have been slow in coming, but this month City Council enacted two innovative ordinances. One would make all owners in the chain of title following issuance of a housing code violation jointly and severally liable for the municipal costs of nuisance abatement where the violations were ignored. The second makes it unlawful for any business entity to buy or sell houses in the City if it has not complied with an existing state statute requiring foreign entities to register with the secretary of state. These measures are aimed directly at the problem portrayed in Pittsburgh. Also, the litigation by a nonprofit developer in December, 2008 against Deutsche Bank for ignoring maintenance of houses it purchases at sheriff sales is still pending in the Federal District Court here in Cleveland.

Posted by: Kermit Lind | Nov 29, 2011 7:05:23 AM

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