Boosted Local Government Authority under Minimum Housing Codes

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Tyler Mulligan

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Boarded home[2011 UPDATE: For more detail on this topic, see the following 2011 book: Housing Codes for Repair and Maintenance: Using the General Police Power and Minimum Housing Statutes to Prevent Dwelling Deterioration]

North Carolina experienced a record number of foreclosures in 2008. Then, in 2009, even more. January 2010 was worse than January 2009 (the latest foreclosure data can be viewed here). North Carolina communities are seeing unprecedented numbers of vacant and abandoned homes. When these dwellings deteriorate to the point that they become “unfit for human habitation,” cities and counties possess authority under the Minimum Housing Standards statutes (G.S. 160A-441 et seq.) to order owners to repair or demolish the unfit structures. Recent amendments contained in Session Law 2009-279 gave a boost to local government authority under the statutes, essentially shifting some discretion from dwelling owners to local governments. This post explains that shift.

Before getting to the amendments, let’s review the basic operation of the Minimum Housing Standards statutes. As a threshold matter, the statutes contain enabling authority only; a city or county governing board must first enact its own minimum housing ordinance (MHO) using the statutorily-prescribed language. Once a MHO is adopted, the local board must appoint a public officer to exercise the powers granted by statute. The powers consist primarily of holding hearings and issuing orders that require owners to rectify a dwelling’s unfit state. If an owner fails to comply with a MHO order, the statute authorizes the local government to effectuate the order, with any costs becoming a high-priority lien on the property.

There are two broad categories of MHO orders. One category applies to dwellings that are so deteriorated that they cannot be repaired at a reasonable cost (each local government defines “reasonable cost” within its local MHO). For dwellings in this category, the public officer must, by statute, order the owner to “remove or demolish” the unfit structure.

For purposes of this post, we’re more interested in the second category of orders, which was modified by Session Law 2009-279, effective October 1, 2009. This second category pertains to dwellings which, although unfit for human habitation, are less deteriorated and can still be repaired at a reasonable cost.

Under prior law, the order to be issued to owners of these unfit—but still reparable at reasonable cost—dwellings was “to repair, alter or improve or to vacate and close” the unfit structures. Notice that, by its terms, this order provided owners with a choice: either repair your dwelling or board it up. Not surprisingly, many owners opted to board up their structures rather than spend money on repair, sometimes evicting tenants in the process and leaving vacant and blighted structures behind. The 2009 amendments took that choice out of owners’ hands and essentially gave it to local governments.

Here’s how. For these reparable dwellings, the order issued to owners under the new law requires them simply “to repair, alter or improve the dwelling in order to render it fit for human habitation.” Owners are no longer presented with the option to vacate and close an unfit dwelling. MHO public officers may supplement the repair order with an order to vacate and close the dwelling, but this supplementary vacate and close order is intended only as a temporary measure for the protection of occupants during the time allowed for repair.

Does this mean that dwellings cannot be indefinitely vacated and closed any longer? No. If an owner fails to comply with a MHO repair order, the local government makes a choice. It may choose either to make the repairs itself, with the costs becoming a high-priority lien on the property, or it can vacate and close the dwelling indefinitely.

With this shift in authority, MHOs could potentially play an important role in preserving dwellings that are deteriorating in the wake of foreclosure. Taken together with other powers, MHOs could serve as one component of a comprehensive program for regulating vacant and abandoned dwellings. I’ll save that discussion for a future post, but if you want to read ahead, the unabridged legal analysis can be found in my law review article on vacant property registration programs.

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7 Responses to Boosted Local Government Authority under Minimum Housing Codes

  1. fred baggett says:

    Tyler

    Doesn’t this hopeful result from these amendments rest on 2 doubtful assumptions?–1) owners will comply with a repair order in the absence of the “vacate and close” stick; and 2) cities will gear up house repair teams or contractors to do the repairs (and deal with the tenants during repairs). This would be a significant budget issue. Liens are good in theory, but not real money. I realize we do demolitions now, but these are simpler in terms of time and money.
    This bill was pushed by tenants’ rights groups, which were trying to protect tenants from being evicted in minimum housing enforcement (a legitimate problem), but I wonder if owners will actually repair upon a mere order, and if cities can afford to become the repairman for unfit dwellings (owners may sit back and let the city do the work and endure the lien which really doesn’t have to be paid unless and until the property is sold).
    The law review article is very good, and thanks for working in this knotty area.

    Fred Baggett

    • Thanks Fred. I agree that the statutory change doesn’t eliminate all of the tough issues. For local governments which do not possess funding for making repairs, the new law puts them in no better situation. They will still need to be creative in funding any repairs, perhaps relying on sources such as county weatherization programs, federal Neighborhood Stabilization Program funds (if fortunate enough to obtain an allocation), or Community Development Block Grant funds.

      Under the new law, local governments still possess the “vacate and close” stick in the event owners fail to comply with an order to repair an unfit dwelling, but there is the larger question of whether any stick is sufficient to cause an owner—who may be absent or already struggling financially—to repair an unfit dwelling. That is why some local governments may prefer to repair unfit dwellings themselves, at least in certain areas of the community where preservation efforts are being undertaken.

      If local governments repair these dwellings, then you raise a good question about the challenge of collecting on the lien. I would raise two points for officials to consider. First, the liens are collected as liens for special assessments (G.S. 160A-443(6)). This means they are senior to all other liens (except other tax liens) (G.S. 160A-233) and survive foreclosure. Second, as special assessment liens, they are collected “in the same manner as property taxes” (G.S. 160A-228). That makes available some fairly robust collection methods, including levying personal property, garnishment, and claims through the Debt Setoff Act, not to mention tax foreclosure.

      I’m not an expert on these collection methods, but collecting taxes is not a new business, so it should be possible to predict how much money can reasonably be recovered. The process is never as easy as it sounds on paper, but at the same time, many local governments already have an established tax collection procedure. Would it be possible, through careful design, to establish a revolving fund for the purpose of making repairs and collecting a good portion of the costs through normal tax collection methods? Someone in the trenches would know better. If anyone has already established such a process in North Carolina, it would be great to hear about it, whether a success or failure.

  2. How would these changes effect the options of local government for those structures located on an eroded beach and left stranded, uninhabitable, and, temporarily … until the next storm, still in a condition which would be habitable if the strucutre were to be moved? Any changes?

    • Thanks for posting this interesting scenario. I don’t think the recent amendments to the minimum housing statutes provide any help here, and I’m not sure minimum housing is the best tool to use. Let me explain. If we assume that the dwelling in your scenario was found “unfit for human habitation” for no other reason than the danger posed to occupants due to its location on an eroded beach, then it is difficult to imagine how an owner could comply with an order to “repair.” It seems a bit absurd to order an owner to repair a structure that is not really in need of repair; when actually it needs to be moved off the property entirely. For that reason, I wonder whether some other authority would be better suited to the situation. For example, would it be better to condemn the house under G.S. 160A-426 (“especially dangerous to life”) and then order its demolition under G.S. 160A-428? The owners would still be given sufficient time to move the house if they so desired. One question: would local officials be comfortable finding that a structure’s location on an eroded beach poses sufficient danger to life to warrant condemnation? Anyone have any thoughts on that?

  3. Dorothy Smaldone says:

    You mention utilizing CDBG or NSP funds. How are municipalities combining the minimum housing changes with the acquisition of property by eminent domain in order to provide affordable and work force housing?

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