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Sound Off

Sound off: If a bank owns a single-family house, who is responsible for its upkeep when it starts to become neglected?

According the Code Enforcement Manager Brian Jimenez, it can be difficult to determine who the owner of a property is during foreclosure. Once the process is complete and the bank becomes the owner, the bank has the responsibility of maintaining the property.

Comments

somedude20 2 years, 10 months ago

Boy, I sure hope that some how some way that the tax payers are on the hook for it. Banks need their money more than us little people.....without money, it would not be a bank!

Ron Holzwarth 2 years, 10 months ago

The bank is also required to pay the property taxes.

And, the bank needs to hope that the house does not turn into a "Discount Home Depot". It is amazing how fast houses are stripped in southern California. I know a family that lost their home to foreclosure, and things were being stolen from it before they were even completely moved out.

They knew better than that, they had already been told that the only way to move in southern California is to have a moving van come and get everything in one day. But they thought it would not apply to them because the house was on a dead end street, and they didn't think anyone would see them moving. But, the word got out and spread really fast.

And within three weeks, everything of value had been removed from the house. By that, I mean the plantings in the yard, the ceiling fans, the furnace, the toilets, the doors, and I'm not sure what all else. I think the sinks were stolen also, but I'm not sure.

Needless to say, banks in southern California suffer tremendous losses because of that. The only way they can sell the houses after that is to heavily discount them.

Ron Holzwarth 2 years, 10 months ago

Gee, I forgot something. The hot water heater was stolen also.

Ron Holzwarth 2 years, 10 months ago

In this case that didn't happen. All the iron fencing was stolen, though. So much for iron fences keeping the thieves out, huh?

progressive_thinker 2 years, 10 months ago

I hate to break the news, but it is unlikely that the bank will do much of anything, and the city will do little to enforce the code.

We had a foreclosure next door to us a few years ago. Two other neighbors and myself made a commitment to keep the yard looking good. I am convinced that the fact that the house looked well kept is the reason that it sold quickly once the foreclosure proceeding was completed.

From my perspective, the mortgage company acted quite irresponsibly. However, as area property owners, we felt that it was necessary to take action to protect our interest in property value.

Joe Hyde 2 years, 10 months ago

p_t, you and your two neighbors are good people for doing what you did. My hat's off to you.

I'm presently in a holding pattern waiting for bank action on a house that I bid on. Four days after signing the contract to purchase I was told the transaction is being processed as a Short Sale. (Google that term some morning when you want a cup of cold coffee to go along with your stale cinnamon roll.)

The yard is being maintained satisfactorily -- by whom, I don't know. Good neighbors like you maybe? Still, it's very stressful wondering how long the transaction will take to close, worrying 24/7 that the house might get broken into and stripped of equipment and appliances. To protect it from vandals and thieves I would happily tent camp on the yard with a loaded pistol if I knew for certain that I wouldn't get arrested for illegal trespass.

With the present economy they keep calling this a "buyer's market". Maybe it is, but it's also very much a "worrier's market" for buyers compelled to wait on banks to finish doing their things in complicated sales.

progressive_thinker 2 years, 10 months ago

I think that you are better off with the short sale. In a foreclosure, there is a right of redemption after the sale. I believe that the right of redemption is 12 months. My understanding is that in the short sale, there is no such right.

As to protecting your property, a good strategy is to do what you can to make the place look like it is not abandoned. Make sure that the yard is cleaned up, that there are no old newspapers on the porch, and that sort of thing. It also might be a good thing to knock on the neighbors door and introduce yourself.

While it is technically possible to get arrested for trespass, it would seem unlikely that you could get convicted for trying to make the place look better and be more secure. It would seem that your actions would appear to be more of a good Samaritan than of someone with ill intent. I am not a lawyer though.

Ron Holzwarth 2 years, 10 months ago

progressive_thinker, you are absolutely correct on the right of redemption for 12 months. You can lose a lot of money if you really fix up a house that you bought at a foreclosure sale. Because if the former owners see that and can come up with some money, you will lose every dime you put into the house when they redeem it. They do NOT have to pay you for the work you did on the property. If it is attached to any structure, it is part of the property and goes with it. I don't think that's a very real risk in most cases, though.

A big problem with purchasing a foreclosed home is that you will not be able to get a title insurance policy for the property, at least in California. And without a title insurance policy, you can really lose a lot of money if some problem appears on the abstract.

You might later find a lien against the property, and there will be no way to take care of the problem without paying it yourself. If it has been more than 7 years since the lien was filed, you will not even be able to sue the former owners that did not pay for whatever work was done on the house that did not get paid for. It will be your problem, and you will never be able to sell the property until you have paid it.

And guess what: Without a title insurance policy, you cannot obtain a mortgage, at least in California.

You need cash and the willingness to take a risk when you buy a foreclosed home. That's why they go for such low prices. Purchasing such properties is NOT for people that are not well informed on the risks they are taking.

There is another thing that is very important. If you don't do this, you are just plain stupid and you deserve to lose all your money:

Take a very good look at the property on the day of closing. You can change your mind on that day, you are NOT legally obligated to buy the property no matter what you have signed beforehand until you sign on the day of closing, at least in California.

If the place is trashed, tell the sellers sorry, they waited too long, you are no longer interested. End of story.

And, about short sales, that is the way to go. No risk there, except that the place can get trashed very quickly by various parties. And yes you can get a title insurance policy and a mortgage when a short sale is taking place.

I know all of this because I am nosey as hell, I took a course in Real Estate Principles in California, my brother in law worked in the title insurance business in California, and I know two families right off the top of my head that have gone through foreclosure. One was in Kansas, and the other one was in California.

Laura Wilson 2 years, 10 months ago

Unfortunately foreclosure can take a couple years. We have a couple houses in our neighborhood that have been abandoned for 2 1/2 years and they're still in the middle of the foreclosure action. The city mows every couple of months and charges the owners, but they look horrible. Until the action is complete, the mortgage holder doesn't own the property. If the place is abandoned, the former residents/owners are the ones responsible for upkeep and taxes, not the mortgage holders. Without a court order I'm not sure the mortgage holder has the right to even go and mow the lawn.

Matthew Herbert 2 years, 10 months ago

As someone who has purchased 3 foreclosed homes, I can tell you that the process is also made slow by the mile of paperwork associated with buying a foreclosure property. As my realtor told me "buy a foreclosure, kill a tree". The last foreclosure I purchased involved nearly a 3 month closing process.

Ron Holzwarth 2 years, 10 months ago

The family I know that lost their home to foreclosure in California just quit making payments, and it was literally 10 months before they were kicked out. Then, it took a couple months before the bank could sell the property. That's the one I was talking about in the third posting from the top.

I thought it was very strange that the place was in foreclosure again in less than a year! I heard all about it because everything is published, the former owner worked in real estate and had access to a lot of people and things, and he was curious about what happened to his old house.

The new owners had no idea how much it would cost to replace everything to make the house livable again. They didn't even get toilets in their new house.

Then, they tried to start a lawn. The former owners had quit watering it and let it all die because it cost too much to keep it alive. (The property is on 1.1 acres, but not all of it was in lawn.) Why keep the lawn alive when you're going to be kicked out anyway? And, the place has a large swimming pool, a 10 person jacuzzi, and two fake waterfalls. Because of all that, there was a lot of evaporation taking place.

Whoops. Water is very expensive in southern California. They were not prepared for a water bill that was never lower than $300 a month. After everything the new owners had to replace, they had not budgeted for that too!

So, they lost the place also, and after that, I don't know what happened.

Matthew Herbert 2 years, 10 months ago

Did they view the property before purchase? I have a hard time being sympathetic to someone who has to spend money replacing toilets, when a simple viewing of the property would have demonstrated the lack of toilets. I also have a hard time being sympathetic to someone who prioritizes spending $300 a month to water their lawn while simultaneously NOT paying their mortgage.

rockchalker52 2 years, 10 months ago

Sometime, the banks will keep the lawn mowed & defer all other issues until they see what kind of purchase offer somebody throws at 'em.
Other times, they'll spend a bit, if they have to, to make it marketable.

George_Braziller 2 years, 10 months ago

A few years ago there was a house next door to me that the owners suddenly abandoned. Just packed up one night and left. The bank eventually foreclosed on it but it sat empty for four years. I started mowing the yard because the grass was two feet tall and I couldn't stand it any more. During the entire four years the only time it was mowed was when I did it.

jayneway 2 years, 10 months ago

This is happening in my neighborhood right now. The house behind us has been vacant over 3 years with no action at all by the bank. One neighbor maintains the front yard. We call the city regularly in the summer to have the backyard mowed. The house used to be alive with a family; and now it's falling apart. It's amazing how fast that happens.

Maybe riverrat is trying to move into our neighborhood!

deec 2 years, 10 months ago

Maybe if Wall Street wasn't fraudulently foreclosing on so many houses, this wouldn't be such a problem nationwide. Where are the criminal prosecutions of these thieves? http://www.washingtonpost.com/business/economy/bank-foreclosure-fraud-settlement-said-near/2012/02/08/gIQAXHAA0Q_story.html

Ron Holzwarth 2 years, 10 months ago

They're not thieves if they're rich, and criminal prosecution is for poor people. (All the more so if they're Black or Hispanic.)

Didn't you know that?

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