A Closer Look At Ordinances Requiring Vacant Property Registration

By Jonathan L. Engman, Esq.
Fabrizio & Brook, P.C.

A growing number of Michigan cities are passing ordinances that require the registration of "vacant" or "abandoned" real property. An initial reaction may be favorable because many of the ordinances' stated purpose is "to protect the health, safety and welfare" of the citizens and control alleged blight caused by foreclosures. However, is this the true purpose and is this type of ordinance the proper way to handle it? For some cities, a closer analysis may show otherwise. There are many similarities in a lot of these city ordinances not least of which is the fact many were passed during the same time period (summer, 2009). Another is the fact that many are almost identical, word for word. Those two facts alone could lead any reasonable outsider to conclude that a form ordinance was handed out during a seminar at some exclusive municipal winter convention. Despite the stated purpose, further consideration exposes that the ordinances' real purpose may be to generate revenue from people and entities that would not otherwise be responsible for the properties. Many of these ordinances are overly broad and potentially subject to a constitutional challenge. The use of these ordinances to control blight, what may initially be seen by some to be an important act on the part of the cities, raises the question: isn't that what the blight ordinances are for???

In general, the registration ordinances require an owner of a vacant and/or abandoned property to file a registration form with the city providing contact information for the owner or the owner's agent. Many of the ordinances require that an owner located over a certain distance away from the property hire a management company or agent that will be responsible for the maintenance of the property. In addition to the registration form, almost all of the city ordinances require the owner to pay a monthly or yearly registration fee. [1] The registration fees vary widely and some cities also require an inspection or monitoring fee in addition to the registration fee. All of the ordinances require that the property be kept secure and maintained and most of the ordinances allow the city to place a lien the property for unpaid fees, penalties and costs for maintenance. This article focuses on the definition sections of the ordinances because it is here where most appear overly broad and over encompassing.

Defining "Ownership"

The first question that arises is who is responsible to register the vacant property. Most of the ordinances define the term "owner". A few are narrowly crafted, such as Plymouth Township's ordinance that defines an owner "as one who has the right to possess, use, and convey something, i.e. the owner, occupant or successor to title by foreclosure, sheriff's sale or by court order." [2] However, many of the ordinances are overly broad and define a person or entity as an "owner" even if that person or entity does not have a legal ownership right in the real property. For example, the City of Bloomfield Hills' ordinance defines the term "owner" as an individual or legal entity "having a legal or equitable title or any interest in any real property." [3] This definition is so broad that it would not only encompass a record titleholder, but also a mortgagee, a purchaser of a sheriff's deed who is still waiting out the expiration of a redemption period and even includes anyone who holds a recorded lien against the property! The Michigan Supreme Court has held that even an easement constitutes an interest in real property. [4] Therefore, anyone holding an easement could be considered an "owner" and subject to the registration ordinance.

Although the purpose of most of these ordinances is to target homes in foreclosure, the Michigan Supreme Court has held that someone who purchases at a foreclosure sale has an equitable interest only that ripens into a legal title if the property is not redeemed as provided by law. [5] The purchaser does not have the right to grant possession or transfer title to the real property until the redemption period has expired and legal title has been obtained. In addition, a person or entity that holds a recorded lien against real property is said to have an interest in the property, although the lien holder does not have any legal title or possessory right to the land. Certainly, one would not think that a lien or easement holder should be considered an "owner" as defined by many of these ordinances.

In the City of Bloomfield Hills, the ordinance states, "an owner of vacant property in the City shall be responsible for registering that property with the Code Enforcement Official by complying with the affidavit and registration and inspection fee requirements in the Article within the times in this Section." [6] Based on the city's definition of "owner" this would include the holder of a sheriff's deed during the redemption period and a lien holder against the property. The ordinance further states, "In the event the owner shall fail or refuse to register the property, the lender or possessory lender shall be responsible for compliance with this provision." [7] So, in an attempt to get some individual or entity to take responsibility for the property, this ordinance requires that any lien holder or other interested party register the property, pay a registration fee, maintain the property and be subject to civil fines and penalties, regardless of whether or not they have a legal right to possess or transfer title to the property. In other words, regardless of whether they are really an "owner". This puts mortgagees, lien holders, and other interested parties in a very difficult situation, perhaps even one that is unconstitutional. It is questionable whether an ordinance could make a person or entity that only has an interest in a property civilly liable for not registering the property when they do not legally own it.

What Constitutes Vacant/ Abandoned property

Another source of confusion in these ordinances is what constitutes vacant property. To make this determination, one would again turn to the definition section of the ordinances. Again, in defining the term "vacant", some of the ordinances are overly broad for the stated purpose of the ordinance. A nicely tailored definition can be found in Plymouth Township's ordinance that defines vacant property as "a lot, building, or structure that is not legally or currently occupied. Vacant property does not mean property that is temporarily unoccupied while the residents are away on vacation, personal matters or business, or is not intended by the owner to be left vacant". [8] Unfortunately, many of the ordinances are not so specific. West Bloomfield Township defines vacant property as "an unimproved lot or parcel of real property that is not currently used or occupied and an improved lot or parcel of real property with at least one building or structure that is not currently used or occupied." [9] Several of the ordinances such as Keego Harbor's, simply define vacant as "a building/structure that is not legally occupied". [10]

An example of the frustration caused by a literal reading of these ordinances would be in a situation where a someone buys a piece of unimproved property in West Bloomfield Township to build a house, but does not begin construction for a few months. Since West Bloomfield's ordinance includes an unimproved lot not currently occupied, arguably the owner would be required to register the lot and pay fees to the township. Another problem could arise in Bloomfield Hills where the definition of "vacant" mirrors that of West Bloomfield's ordinance above. [11] There is no time period in the definition as to how long the property must be "unused" or "unoccupied" before it is deemed vacant. So, a resident who maintains his home and mortgage payments may unintentionally own a piece of "vacant property" if they live elsewhere during the year. This brings to mind all of Michigan's snowbirds who leave their homes "un-used" and "un-occupied" in the winter months to temporary reside in the sunshine states. Even a person who purchases a house in these areas, but takes a few months to move into it appears subject to registering and paying fees. It should be noted that some of the ordinances do exempt residents who live elsewhere part of the year. For example, Southfield's ordinance states that a house "which remains furnished, utilities connected or in use, and the property maintained while the Owner is absent, shall not be considered vacant." [12]

Certainly, if the purpose of these ordinances is to fight blight, property owners that would abide by the registration ordinances are likely keeping their properties secure and well maintained anyways. Owners that are truly abandoning their properties and not maintaining them are not going to comply with registration ordinances and subject themselves to more fees and responsibility. It is a safe bet that almost every city in this state has some form of blight ordinance requiring properties to be maintained. Registration ordinances, while claiming a legitimate purpose, seem only to be duplicative. The result of which generates more revenue while imposing overly burdensome responsibilities on individuals and entities that do not hold title and true ownership to the property.

Conclusion

More cities across Michigan are passing registration ordinances in what is likely an attempt to deal with increasing foreclosures and bank owned homes. The over breadth of some of the ordinances raise questions as to their legality. By keeping the definition of an owner broad, many of the ordinances assess fees and place responsibilities upon parties that are not the titleholder of the properties and are not legally responsible for the security and maintenance of the properties.

Although cities may be well intentioned, city councils contemplating such ordinances need to carefully consider the ordinance's purpose and then narrowly draft the language to achieve their goals. If the true purpose is to generate more revenue, then many of these ordinances will most likely do that. If the purpose is to combat blight, then there are already blight ordinances that can be enforced without additional legislation. If the purpose is to have a registry of bank owned or abandoned properties, then the ordinances need to be more narrowly tailored so that they apply to individuals and entities that are the true titleholders of the properties. What citizens likely do not want is a harassing ordinance requiring them to notify their cities when they're out of town or when they lawfully own undeveloped lots or homes that they are not currently living in. What cities likely do not want is an ordinance that cannot withstand legal or constitutional challenges. Whether these ordinances are challenged as written or whether they are improved is likely up to us.

 


[1] Of the 29 ordinances reviewed, only 2 cities did not appear to impose any type of fee.

[2] Township of Plymouth, Ordinance No. C-2009-08.

[3] City of Bloomfield Hills, Ordinance No. 375 (2009).

[4] Kitchen v Kitchen, 465 Mich 654 (2002).

[5] Dunitz v Woodford Apartments Co., 236 Mich 45, 49-50 (1926).

[6] City of Bloomfield Hills, supra Section 4-323.

[7] Id.

[8] Township of Plymouth, supra Sec. 2.

[9] Charter Township of West Bloomfield, Ordinance No. C-735 (2009).

[10] City of Keego Harbor, Ordinance 5-150 (2009).

[11] City of Bloomfield Hills, supra Section 4-322.

[12] City of Southfield, Title VIII, Building Regulations, Chapter 104.