About Real Estate: How to deal with a next-door foreclosures
A staggering 92 million owners will see their home's value plummet an average of $20,000 in the coming months because banks have increased their foreclosures. Smart owners and sellers can limit the damage by calling local officials.
Q. The house next door to us was foreclosed and has been vacant for about eight months. It looks awful #8212; some windows are broken, there is some graffiti on its side walls, and the overgrown grass in the front yard is attracting mice and rats that run onto our property! What can we do about this problem? We're especially concerned because we plan on putting our own home up for sale and are worried this crummy-looking foreclosed house next to us will force us to lower our asking price.
A. I don't blame you for being worried about how the nearby foreclosure is affecting your property values. Though it's little consolation, there are a lot of people like you in the same situation: According to a new study by the respected Center for Responsible Lending, the record number of recent foreclosures will negatively affect 91.5 million homes by 2012 and will reduce the value of these properties by a nationwide average of $20,300.
Because such an overwhelming number of homeowners across the nation are facing a loss in value from nearby foreclosures, I am devoting this entire column to answering some of their pressing questions.
Q. Is the bank that foreclosed on my neighbor's home responsible for maintaining it because the bank is now the #8220;owner?#8221;
A. It depends on where you live. There is no federal law that requires banks to maintain their foreclosed homes. But a few states, including New Jersey and California, recently approved laws that essentially require lenders to take care of the properties that they have taken back.
Several cities across the nation also have adopted local ordinances that require banks to maintain their foreclosed properties, especially if they are abandoned. Contact your city attorney or county supervisor to find out whether there's such a law in your neighborhood.
Q. I live in a large development that is governed by a homeowners association. Can the HOA clean up the foreclosed home that is across from me and then bill the lender for the work?
A. Yes. Most HOAs have rules that require an owner #8212; whether it's an individual or a bank #8212; to keep a property in good shape. The association could pay to have the grass mowed and perhaps even have the home's exterior walls painted, then slap a lien on the house that the bank likely would have to pay before the property can be resold.
Q. Can I just go over and cut the dead grass in the yard of the foreclosed house that is near me, and pick up the trash?
A. You could, but that might be a bad idea. Despite your good intentions, you could be fined or even jailed for trespassing on another's property.
A few courts have even ruled that cutting another property owner's grass or picking up trash from the yard is #8220;theft of personal property#8221; #8212; punishable by a year or more in prison. Those were stupid rulings, but everyone knows that judicial decisions don't always make a lot of sense.
Q. After several phone calls, I finally reached a surly representative from the lender that now owns the eyesore two doors down from me to explain the problems that the abandoned property is causing. The rep said this lender has tens of thousands of foreclosures, and that it will get around to tending to the property on my street #8220;whenever it can, which might not happen until 2012 or maybe the year after.#8221; What can be done in the meantime?
A. Many banks are indeed awash in foreclosed homes, but that doesn't mean that neighboring owners must suffer from the blight that an abandoned property can cause before the lender finally gets around to fixing the place and putting it back on the resale market.
Again, your best bet is to contact city or county officials, even if they have not adopted a local ordinance to deal with foreclosed homes. The local building and safety department usually can board up a home's windows and doors, and then bill the lender for its efforts.
The health department can be called if the foreclosed property poses health risks, such as the rats or mosquitoes that often breed in empty houses or overgrown lawns, or feces left in a toilet that was disconnected from the plumbing system.
Contact the local fire department if the grass in the yard is dead, the roof is in disrepair or the property poses other fire risks. Also call the police or sheriff's department to report any vandalism or trespassers: Your reports can help keep the #8220;bad guys#8221; from causing further damage to the foreclosed home and your own property's value, and even could be used as evidence if the bank keeps dragging its heels and you ultimately must ask the city or county to bulldoze the house because it has become a neighborhood nuisance.
Filing such free reports doesn't take a lot of time, but it can prompt lenders to act more quickly to deal with their foreclosures #8212; especially if the bills from local government agencies keep mounting.
#376; For the booklet #8220;Straight Talk About Living Trusts,#8221; send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960.
© 2011, Cowles Syndicate Inc.