That Credit Union Blog

By: Larry R. Rothenberg

Afflicted by crime, foreclosures and vacant buildings and houses, the City of East Cleveland has enacted an unpalatable ordinance as far as mortgage lenders are concerned. The stated purpose of the ordinance is to require the registration and payment of an annual registration fee for any vacant house or building in the City of East Cleveland, in order for the city to monitor the properties and to impose fines for noncompliance.

If You Hold A Mortgage And Secure The Property, You Are An “Owner”

The ordinance is enforceable against each owner. “Owner” as defined in the ordinance, includes not only the owner of the property, but also a mortgagee, a vendee-in-possession, assignee of rents, receiver, executor, trustee, lessee, agent or any other person, firm or corporation that is directly or indirectly in control of a building subject to the provisions of the ordinance. Hence, by either securing a vacant property or purchasing it at a sheriff’s sale, the mortgage holder becomes subject to compliance.

Application for License

The “owner” is required to submit a verified application to the City to disclose all measures to be taken to ensure that the building will be kept weather-tight and secure from trespassers, free from nuisance and in good order. The building or housing inspector must be permitted to inspect the property and when applicable, will issue a report to the owner specifying the reasons why the property does not conform with the vacated building maintenance standards set forth in the ordinance.

If the owner is a corporation, the registration statement must provide the names and residential addresses for all officers and directors of the corporation. It should also be accompanied by a copy of the most recent annual franchise tax report filed with the Secretary of State.

If the inspection shows that the building is in compliance, the mayor shall authorize the issuance of a vacated building maintenance license. The vacated building maintenance standards require that the building be well-kept and adequately protected from intrusion by trespassers and from deterioration by the weather, and provide detailed requirements for building openings, roofs, drainage, building structure, structural members, foundation walls, exterior walls, decorative features, structure extensions, chimneys, sidewalk openings, accessory and appurtenant structures, and the premises.

The registration statement must also provide the name, address and telephone number of a person who resides within the state that is authorized to accept service of process on behalf of the owners. This person shall be designated as a responsible, local party or agent, both for purposes of notification in the event of an emergency affecting the public health, safety or welfare and for purposes of service of any and all notices or registration statements in connection with the ordinance.

Registration Fee, Fines and Late Fees

The owner must pay a non-refundable $500 annual registration fee. Even if the property is in compliance with all standards, the owner must place a clearly identifiable placard on the property that contains the names, addresses and telephone numbers of any and all owners as defined by the ordinance. Fines may be imposed starting at $1,000 annually and increasing each year that the property is not well-kept.

A one-time waiver of the registration fee or an extension of a waiver for up to 90 days may be granted by the mayor upon application of the owner, if it can be shown that the property is in the process of demolition or the owner is actively attempting to sell or lease the property during the vacancy period. Delinquent registration fees are a lien on the property. The owner must maintain general liability insurance in an amount of not less than $300,000 for residential buildings containing no more than four dwelling units, and not less than $1,000,000 for any other building.

The failure or refusal for any reason of an owner to register a vacant house or building or to pay the fees required by the ordinance within 30 days after they become due is a first degree misdemeanor punishable by a fine of $500 to $1,000 per violation, and is also punishable by up to six months in jail. Each day shall count as a separate violation, and the minimum fine of $500 is not subject to suspension or reduction for any reason. Late fees may be assessed equal to the license or renewal fee, or $1,000, whichever is less.

For a complete copy of the ordinance, go here.

If you have any questions on this information, please contact Mr. Larry R. Rothenberg, Esq. Larry Rothenberg is the partner-in-charge of the Cleveland real estate and foreclosure department of Weltman, Weinberg & Reis Co., L.P.A. He is the author of the Ohio Jurisdictional Section contained within the treatise, “The Law of Distressed Real Estate”, published by The West Group. The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan. Larry can be reached at (216) 685-1135 or via e-mail at lrothenberg@weltman.com.

Client Advisory is published by Weltman, Weinberg & Reis Co., L.P.A. For over 75 years, we have been providing comprehensive creditor representation and legal services to clients. Our approach integrates the filing of legal action with our recovery activity anywhere a debtor or debtor’s assets may be located. We coordinate the handling of files personally throughout our footprint states of Illinois, Indiana, Kentucky, Michigan, New Jersey, Ohio and Pennsylvania, or through our national attorney network. When it comes to creditor representation at WWR, we get it.