AGENDA MEMORANDUM

 

Meeting Date:           February 25, 2008

 

From:                          Fred A. Morrison, City Attorney

 

Subject:                      107 North 12th Street

 

 

Staff Recommendation:

Authorize either foreclosure of code enforcement liens against the property at 107 North 12th Street, initiation of an action for a money judgment against the property owner, or both simultaneously.

 

Analysis:

For some time now, Code Enforcement Officers have been attempting to ameliorate serious code violations at the house located at 107 North 12th Street. The home has been unoccupied for a long time and has fallen into a serious state of disrepair. The failure of the owners to tend to basic tasks such as routine maintenance of the structure, and the mowing and cleaning of lawn and shrubs, has resulted in a situation which fosters unlawful entry and occupancy by transients, the accumulation of trash and debris, and the presence of rats and other vermin. This in turn has led to multiple complaints from understandably disgruntled neighbors.

 

The property is owned by a dissolved Florida corporation, Preferred Realty Services, Inc., with an address in Dade County. The owner has not responded to the efforts of Code Enforcement, either the violation notices or findings of violation and imposition of liens by the Special Magistrate. In most of these cases the Special Magistrate authorizes foreclosure and our office proceeds with the foreclosure action as a matter of course. This either leads to the owner correcting the problems to avoid losing the property or to the City acquiring the property so it can conduct the necessary cleanup and re – sell the property to recoup its expenses.

 

However, in this instance there is a mortgage against the property, held by a private individual in Miami Lakes. Typically the City does not foreclose against property which is subject to a mortgage because immediately upon taking title the City would either need to pay off the mortgage, or would face losing the property to the mortgage holder when payments are no longer made. The City would then lose its investment in the property, incurred in the form of the cost to foreclose against it and rehabilitate it.

 

In a couple of past situations where there was no other way to achieve code compliance, the City has elected to proceed against property subject to a mortgage even though it would end up losing the title ultimately to the mortgage holder. Foreclosing would at least permit the City to take title long enough to clean up the property, take whatever steps are needed to bring it into at least minimal code compliance, and resolve the problems with unauthorized occupancy and vermin.

 

The estimated cost to finalize a foreclosure is in the range of $2,500.00 to $3,000.00. The cost to rehabilitate the property is unknown until a complete inspection is made but at a minimum the City would want to mow and clean the exterior and secure the structure against unlawful entry. Whether structural repairs were warranted would be a decision staff could make after the City takes title and conducts a more thorough inspection of the structure including the interior, which currently cannot be accessed lawfully without a warrant.

 

Another, albeit less effective, alternative is to reduce the code enforcement lien to a money judgment. The lien currently has a balance due in excess of $136,000.00 and that amount is increasing at the rate of $250.00 per day. A money judgment alone is only as good as the ability of the defendant to pay it, however, and with the owner being a dissolved corporation the chances are it has few if any assets other than this parcel of property. Since the judgment would have to be enforced by levy and execution against the property, essentially the same as a foreclosure in most material respects, foreclosure is the better way to go. Still, if the Commission wishes to proceed with legal action I recommend filing it in two counts, one seeking foreclosure, the other a money judgment, just to cover all bases until it can be determined whether the owner intends to respond in any way to the lawsuit.

 

There is a possibility a third party could purchase the property at the public auction which is the outcome of any foreclosure. Purchase by a third party would deprive the City of the ability to enter the property and effect the necessary corrective action but hopefully anyone willing to pay cash in excess of the amount of the City’s lien in order to acquire the property would have both the motivation and the wherewithal to respond to the code violations, and would be an owner with whom the City could work to resolve the situation. Although I wanted the Commission to be aware of this possibility, the sheer size of the City’s lien in comparison with the probable value of the property suggests the purchase by a third party at the foreclosure sale is unlikely.

 

Options:        

The Commission may authorize foreclosure of code enforcement liens against the property, pursuit of a money judgment, pursuit of both remedies simultaneously, or take no action and allow the situation to continue as it now stands.

 

Fiscal Impact

A foreclosure will cost between $2,500.00 and $3,000.00 in legal fees and expenses. A money judgment will cost a bit less but with the added expense of levy and execution it may end up costing more than a foreclosure and will take longer to finalize. To this must be added the cost incurred by the City to clean up the property and repair it as necessary, which cannot be estimated accurately at present.

 

Submission Date and Time:    2/20/08 1:47 PM____

Department:   City Attorney

Prepared by:   Fred A. Morrison

Attachments:  Yes____   No __X___

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Revised 6/10/04

 

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