Miami-Dade County OKs code rules on foreclosed homes
By Risa Polansky
Under new Miami-Dade County law, foreclosed homes will be subject to county code inspections and sellers required to disclose any violations — and cost estimates for fixing them — to potential buyers up front.
Another new measure requires lenders to maintain foreclosed properties once vacated.
The legislation morphed Tuesday from proposed laws that would have made code compliance up to owners before a sale and property maintenance up to lenders upon filing for foreclosure.
Commissioner Natacha Seijas originally proposed the ordinance that would have forbidden the sale of a residence until the purchaser on the certificate of title obtained a certificate of use from the county determining that the residence complied with applicable building and zoning codes.
Commissioners, staffers and housing industry players applauded her intention — to protect buyers from surprise code enforcement costs after a sale — but pointed out several "unintended consequences."
"I certainly appreciate the intent of this legislation," Commissioner Katy Sorenson said. But she feared the item could "actually slow down the return of these properties to the market, which is the opposite of what we want."
Long-time real estate broker Doug DeWitt, who handles valuation and disposal for lending institutions, called the measure misguided and unrealistic, warning commissioners that saddling already neglected properties with more requirements will only prolong neighbors' burden of living near derelict homes.
He also worried that the responsibility of bringing homes up to code would fall on brokers, forcing them to become liaisons between banks and general contractors — a job he said they're not prepared to do.
County Chief Economist Robert Cruz feared "unintended" economic consequences such as extended foreclosure processes and higher interest rates.
"Identifying and disclosing code violations is obviously something that benefits the buyer and benefits the economy as a whole… however, what this item does is goes beyond that," he said.
The new law could deter people from intentionally buying fixer-uppers to later sell, a practice that can help keep the market moving, he said. He added he fears banks could pass the cost of code compliance on to customers.
But, Mr. Cruz said, "There is a private sector solution to this, and that's the negotiation between buyer and seller."
Commissioner Carlos Gimenez agreed.
"I think there could be a middle ground on this," he said — the decision of who should handle code enforcement issues should be between buyers and sellers so long as buyers are fully aware of what they're paying for.
Commissioners agreed to amend the proposed law to say that foreclosed homes must be inspected for code violations before a sale and that sellers must clearly disclose violations and cost estimates in putting the home on the market — "versus it being front end when the bank has to carry that from the get-go," Mr. Gimenez said.
The tweaked measure passed unanimously.
The discussion also served to clear up some confusion.
The proposed ordinance read that no home could be sold after a certificate of title was issued until the purchaser on the title obtained a certificate of use showing the home complied with applicable codes.
But sponsor Ms. Seijas said the law was meant for "only the ones that are foreclosed," not all homes.
Commissioner Rebeca Sosa pointed out that the ordinance reads "no" residence.
"Where does it say that we are talking about houses in the judicial hands for foreclosure?" she asked.
A county attorney clarified that a certificate of title is issued in a judicial sale, meaning the law applies to foreclosed homes.
In another measure dealing with foreclosed properties, commissioners Tuesday supported a change to a proposed law that would have required those who filed an action to foreclose a property to maintain it.
Florida Bankers Association President and Chief Executive Officer Alex Sanchez agreed with commissioners that it is in a bank's best interest to keep up properties in order to find buyers — but not upon filing for foreclosure.
Until a foreclosure is finalized, disgruntled residents may still be living in the home and could act out if a bank sent a landscaper or pool cleaner to the house, posing a safety risk, he said.
"The person in there may be mad, may be angry," he told commissioners.
Point taken, sponsor Natacha Seijas said, agreeing to amend the proposed law to stipulate that mortgage holders be responsible for upkeep once a property is vacated.
"Once we foreclose, we're all for restoring the property," Mr. Sanchez said in an interview after the vote. But the revised law still poses a challenge: ensuring a home is truly unoccupied.
"My difficulty is, is it really vacant? The question is now, how do we define vacancy?" he said. "But that is a better step forward than "upon filing.'"