Lenders Become a Bigger Target in Chicago
October 21, 2011
Christopher W. Carmichael- Chicago
Francis Keldermans - Chicago
Proposed Ordinance Could Require Lenders to Post Security Guards at Empty Properties Near Schools – Will Other Cities Across the U.S. Follow Suit?
Capitalizing on the wave of discontent against banks, two members of the Chicago City Council are proposing an ordinance that could require lenders to post security guards at empty homes, commercial buildings or other properties they own near schools – or face fines of up to $1,000 per violation. The ordinance would apply to “owners” of five or more buildings and require the posting of a daytime guard at any vacant building within 1,000 yards of a public school and night guards at all vacant buildings.
Definition of an “Owner”
Like the ordinance that passed in July 2011, the proposed ordinance defines “owner” as an entity “owning, maintaining, operating, collecting rents for, or having any legal or equitable interest in any building, including a mortgagee or its assignee or agent.” Banks and servicers are therefore within the definition of “owner.”
Fines of $1,000 Per Day: Suits Already Filed
The July ordinance took effect on September 18, 2011, and compels “a mortgagee or its assignee or agent” to maintain vacant buildings by, for example, posting signs with contact information and maintaining the exterior of the building. The July ordinance requires a lender to enter the property to perform maintenance – even if possession has not transferred to the lender. The City of Chicago has already filed suits using the ordinance against lenders, seeking fines of $1,000 per day. The proposed ordinance would add the requirement of posting a guard when the property is near a school.
While Chicago is taking a particularly aggressive position to try and remedy the problem of vacant properties in communities, it is possible that other cities across the U.S. could pass similar ordinances holding lenders responsible for maintaining homes, commercial buildings and other types of buildings in default.
Related Practices