GETTING OWNERS TO MAINTAIN PROPERTIES

     

In any vacant/abandoned property strategy, early intervention is key. Before a property becomes abandoned, it is important to engage owners and lienholders, and require them to maintain their properties to prevent them from becoming nuisances. Below you will find information on tools that have been proven to both combat abandonment and prevent further deterioration of vacant properties, as well as an example of a municipality that has effectively utilized them to not only combat blight, but ultimately spur economic growth.

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Vacant Property Registration
Vacant Property Registration Ordinances, or VPROs, have quickly become one of the most popular tools used by municipalities in the fight against problem properties. VPROs enable municipalities to charge annual fees to owners of vacant properties, both as a hedge against potential nuisance and in order to incentivize owners to put their properties back into productive use. A VPRO is enacted through the adoption of local legislation, however, unlike the Abandoned Properties List, the VPRO does not have any specific enabling legislation. Rather, the power of the VPRO stems from the police power granted to the municipality by the state, as well as from extensive New Jersey case law.

A VPRO goes into effect when a building becomes vacant, wherein the owner (or, in some cases, the primary lienholder) of the building has sixty (60) days to register their property with the municipality. If someone takes ownership of a vacant building after the VPRO has been enacted, they have thirty days to register the property or ten days if the building poses an imminent threat to the health and safety of the community. 

It is important here to understand here the distinction between “vacant” and “abandoned”. A property does not need to be abandoned to be deemed vacant, but it must be vacant in order to be designated abandoned. A property is deemed vacant if it has been unoccupied for six months or more. This is also the primary threshold criteria for a determination of abandonment. For the purpose of the VPRO, however, the secondary threshold criteria for a determination of abandonment (discussed in detail here) need not apply.

A typical VPRO has an initial registration fee of $250 or $500 for the first year. While there is no set limitation to the amount of the initial fee that may be charges, most municipalities choose to set a fee that would not be deemed “unreasonable” if challenged in court. As these fees are in theory based on the anticipated cost that will be incurred by a municipality if a building remains vacant, charging an excessive fee in the first year could be seen as unreasonable if challenged. The registration fee usually doubles in the second year, and often triples the year after that. Below you will find a typical VPRO fee schedule:

Initial Registration: $250
First Annual Renewal: $500
Second Annual Renewal: $1,500
Third Annual Renewal: $3,000
Fourth and Subsequent Renewals: $5,000

In addition to fees, a well-written VPRO should also contain property maintenance requirements. This links the VPRO with the existing property maintenance code, both strengthening the overall code and streamlining the code enforcement process. Typical maintenance requirements may include:

  • Removal of any and all trash and debris from the property
  • Securing of the property against unlawful entry
  • Switching off of all utilities such as electric and water
  • Capping of the sewer to prevent toxic emissions

A well-executed vacant property registration will employ standard forms to be completed by the owner/foreclosing lienholder of the property. The form should directly reflect the ordinance it was written to enforce (i.e. listing the same fees and maintenance/upkeep requirements as the ordinance). Several examples of these forms can be found below.

A comprehensive VPRO should also include a requirement for the owner to maintain an insurance policy on the property. This protects both the owner and the municipality against potential liabilities should anyone be injured while on or near the property.

Below you will find examples of model VPROs and their corresponding forms currently utilized by several New Jersey municipalities:

City of Burlington (VPRO/VPR Form)
City of East Orange (VPRO/VPR Form)
City of Newark (VPRO/VPR Form)

Maintaining Vacant Properties in Foreclosure (Out-of-State Creditor Law)

In 2014, Governor Christie signed into law P.L. 2014, C. 35 which requires creditors who have initiated foreclosure proceedings on residential properties to maintain the exteriors of those properties. While the previous Creditor Responsibility Law, which was enacted in 2010, required creditors to maintain properties in foreclosure, it lacked a consistent enforcement mechanism by which municipalities could act to ensure the homes were maintained.

Like APRA and the VPRO, the Out-of-State Creditor Law must be enacted by a municipality through the adoption of an ordinance. Once enacted, P.L. 2014, C. 35 empowers the municipality in which a property under foreclosure is located to require the foreclosing creditor to appoint an in-state representative as a point of contact for the municipality in regards to all property maintenance issues. For every day the out-of-state creditor fails to appoint the in-state representative, the municipality may levy a $2,500 fine against the creditor. Once the in-state representative has been appointed, the municipality may fine the creditor $1,500 a day for every day they fail to maintain the property. For creditors that are already based in-state, a separate in-state representative need not be appointed, however the municipality may still levy the $1,500 fine for every day they fail to maintain the property.

It should be noted that the Out-of-State Creditor Law only requires creditors to maintain the exteriors of properties, however the municipality may still require the interior upkeep of properties via their vacant property registration ordinance.

In addition to the property maintenance requirements and fines enacted, the Out-of-State Creditor Law requires that no less than 20% of the fines collected be used for municipal code enforcement purposes. This may include hourly wages for code enforcement officers and/or office staff, gas and maintenance for vehicles used in the code enforcement process, funding for office supplies, etc.

When any Out-of-State Creditor ordinance is enacted, notices must be sent out to foreclosing creditors via certified and regular mail. Fines may commence 30 days after receipt of the notice letters, or 10 days after receipt if the property presents an imminent risk to the health and safety of the community.

Below are links to several model out-of-state creditor ordinances used by municipalities throughout the state:


Links of Interest