Where Real Estate Investors & Landlords Go for Success

Condemnation Policies

In Michigan, the condemnation of rental property has been more frequent over the past couple of years. The main reason for condemnation is utility shut off where the tenant has failed to pay their water, electric or gas bill.

This is problematic—not only for the landlord but for the tenant. When a utility is shut off and the property is condemned, the landlord must either have the utility turned back on in their name or evict the tenant. Furthermore, the tenants are threatened with immediate eviction by the city. If the landlord pays the bill and has the utility turned back on, the tenant is no longer eligible for assistance to pay for the bill, i.e. they now owe a huge chunk of change to the landlord—an amount that they are unlikely able to afford. Most cities require action within 48 hours for a utility shut off. This is rarely enough time for a tenant to obtain assistance with their past due bill. To further aggravate the situation, the landlord will be charged a fee for condemnation…all because a tenant failed to pay for a utility. If the tenant doesn’t pay the landlord for the bill, they will likely be evicted.

Other situations arise when an investor takes possession of a property that has been condemned. The city requires that the property be brought up to code—before water will be turned back on. No one needs to point out the obvious here: it’s not very easy to rehab a property with the water turned off. If nothing else, the plumber can’t check his work and do pressure tests. The city’s logic in these situations is wacky and completely impractical and contrary to the municipalities’ own goal of getting properties up to code and occupied.

In the end, crazy condemnation policies have a detrimental effect on the availability and affordability of housing. Some officials with the City of Grand Rapids see the illogic in all this and have agreed to meet with the RPOA to discuss policy changes and possible code changes. More on this to come.

 

 

June 9, 2016 @ 11:07 a.m.