St Louis Real Estate – City of St Louis Vacant Property Bill Update

Dennis Norman

Update: March 23, 2010:  In spite of the concern of many organizations including the St. Louis Association of REALTORS, the Mortgage Bankers Association and the Title Insurance folks, the Board of Alderman passed the vacant property ordinance on March 12th – Now that lenders and title companies are aware of potential title and lien issues with this bill I have no doubt investors, and even homeowners, are going to run into some roadblocks when trying to finance property in the City of St. Louis – 2/3 of the Alderman voted in favor of the bill:

The Following Aldermen Voted FOR the Bill: Troupe, Flowers, Bosley, Ford-Griffin, Triplett, Young, Kennedy, Davis, Schmid, French, Boyd, Cohn, Williamson,Carter, Krewson and President Reed.  

Voting AGAINST the Bill and in favor of property rights were the following Aldermen:  Ortmann, Villa, Heitert, Gregali, Baringer, Vaccaro and Waterhouse.  – end of update

In about 2 hours the board of alderman for the City of St Louis will most likely vote to pass the “Vacant Property Registration” bill that I wrote about last week in a post, pointing out what I feel are serious issues the bill has.  In spite of opposition by the St. Louis Association of REALTORS(R), The Mortgage Bankers Association, as well as many other property owners, reahbbers and investors, the Board of Alderman for the City of St. Louis will most likely pass the bill this morning.  If that happens, Mayor Slay still has the opportunity to stop this bad piece of legislation by using his veto power, but, from what I hear, this won’t happen most likely, “it’s not the way city politics works”. 

In the face of yet another layer of bureaucratic red tape and fees that stand between property owners and their property I thought now may be a good time to share a story of just how ridiculous some of these things are, as well as the risk of having “criminal penalties” (such as jail time) for “civil” matters, (such as regitering a vacant property).

Back in 2005 or early 2006 I was involved in the purchase of a vacant building in the city.  The building was in bad condition, and in a neighborhood that was sort of rough, but we purchased it because we felt some nearby redevelopment may continue to spread into this area and make it cost effective to rehab and restore the building or, in the alternative, tear it down and build something new.

After we purchased it we did secure the building as required by ordinance, including boarding up windows and I think we removed a porch that was in bad condition….at one point we even put a new roof on the building to protect it and prevent further deterioration, even though by that time the real estate market was deteriorating and our hopes of rehabbing the property was no longer feasible. 

Somewhere along the line the City issued us a couple of  notices of violation on the property….one came from one arm of city governement and was a list of 9 or 10 building code violations they wanted addressed (one of which was the roof….my partner worked with the city and it was agreed that if we took care of the 5 or 6 “serious” violations then we could ignore the rest….the inspector realized at this point we were looking for a rehabber to buy the property…so, we took care of those items…..during the same time period, from another arm of the city, we received a condemnation notice on the building….it was being condemned for basically the same violations as we were dealing with the inspector on.

Now, here is where there was an error on our part, albeit an honest one, my partner who was dealing with the buidling inspector thought our “deal” with him over the violations was satisfying all issues with the city. After getting summoned to court over the violations on the condemnation notice it was evident there was something wrong.  Thinking it was a simple miscommunication between two city offices, my partner did not panic but worked to get the confusion resolved.  He was in contact with the inspector who kept assuring him everything was OK and would then tell the judge this on the next court appearance.  Unfortunately it took him a while to figure out that the building inspector had nothing to do with the condemnation notice as it was handled by a different office.  It was about this time that the judge started mentioning “Jail Time” (the ordinance provided for this, I think the wording is pretty much the same as the vacant property ordinance).

With the judge threatening jail time, we decided to abandone the idea of “saving” this building and tear down the building to comply with the condemnation order (which was a financial disaster).  We obtained a bid to demolish the building and were scrambling to get it torn down before our next court date.  The Judge had made it clear if the problem wasn’t resolved by the next court date “someone was going to jail“.  Guess what happened though?  The city would not issue a demolition permit!  It wasn’t because the building was a historic building, nor even in a historic district, it was simply because of the age of the building they thought it had “architectural significance”. 

So below is a recap of where things stood at the time:

  • The City had condemned the building and told us to bring it to code (which was financially impossible) or tear it down by a dealine or they would tear it down.
  • We applied for a demo permit and were declined by the City
  • The municipal judge was going to “throw someone in jail” (the property was in a corporation name so we weren’t sure who that “someone” would be but we didn’t want to find out.

So they city said “tear it down“….and the city said “don’t tear it Down“…

Quite a plight…

Point of the story? Over-regulation and too many overlapping ordinances can not only cause confusion and contradiction, but can really make it almost impossible for even the most responsible property owner to comply with all laws, or maybe even figure out what they are being expected to comply with. Oh yeah, and the “jail time” they put in building ordinances, like the vacant property one, that the Alderman assures you “we would never use” (which begs the question, why not take it out of the bill then) does in fact get used and you could find yourself as I did, pretty well innocently in a spot where you are facing it.

The outcome? By the Grace of God, someone surfaced that was willing to buy the building (I use the term “buy” loosely, we basically gave it to him for all intents and purposes). When we showed up at court with the sale contract the judge continued the case for a month and demanded we come back and prove the deal closed. Fortunately the buyer closed, we went back to court, proved the sale to the judge and considered ourselves lucky.

 

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