May 3, 2013
by Adam R. Fogelman
Lerner, Sampson & Rothfuss
USFN Member (Kentucky, Ohio)
USFN reported on two new Ohio vacant property ordinances in the Spring 2012 USFN Report. Since then, the popularity of vacant property ordinances has increased in the state. That 2012 article focused on two (then-) new vacant property ordinances in the city of Cleveland (Ordinances 1519-11 and 1520-11). The two ordinances were enacted in November 2011 and targeted foreclosed properties in the city. The ordinances addressed the recoupment of demolition costs and required entities buying, owning, selling, or transferring properties in Cleveland to be registered with the Ohio secretary of state.
Today, many other communities — both large and small — are turning to vacant property ordinances. These locally-enacted pieces of legislation take one of two forms, either a vacant property registration ordinance or a foreclosure filing notice ordinance.
A vacant property registration ordinance oftentimes requires that a first mortgage holder complete a form and tender a fee to the municipality upon receiving notice that the property is abandoned or vacant. The ordinances usually require action within a relatively short period of time after receiving notice (generally between 10 and 90 days after notice) and continued action during the property’s vacant period. These ordinances are often focused on obtaining a point of contact at the mortgagee’s office for local government use if issues arise with the property.
A foreclosure filing notice ordinance requires a foreclosing litigant to file a form with a copy of the complaint and tender a fee to the municipality in which the property under foreclosure is sited. The form and fee are required simultaneously with the filing of the foreclosure complaint or within a very short time period thereafter. These ordinances act to notify local governments that a property within their boundaries is in foreclosure and to provide those local governments with a point of contact for the property.
A survey of Ohio law finds that there are more than 70 local community ordinances. A look at these ordinances shows that slightly less than half are foreclosure filing notice ordinances and slightly more than half are vacant property registration ordinances.
It is important that foreclosing lenders work closely with their legal counsel to comply with local foreclosure filing notice ordinances. Similarly, lenders should work with property preservation companies, local brokers, or a property management company to comply with vacant property registration ordinances. The failure to abide by these local laws can result in substantial penalties that include fines, fees, and liens on the property for work the city does in maintaining the property.
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