A Continuum In Remedies: Reconnecting Vacant Houses to the Market
32 Pages Posted: 2 May 2014 Last revised: 27 Oct 2014
Date Written: April 30, 2014
For decades, America’s older, undercrowded cities have struggled with neighborhoods beset by vacant houses that seemingly have no connection with a functioning real estate market. A nationwide foreclosure crisis has brought even greater attention to the need for inner-city communities to address vacant house nuisances. This paper argues that recent developments in property theory help us understand and complete reforms of legal remedies that address this continuing national need.
Traditional, in personam code enforcement remedies emanate from a legal understanding of real estate ownership as the strongest of property-rule-protected entitlements. Local government authorities hold owners directly accountable for any failures to address specific property problems through imposition of fines and threats of contempt. These work fairly well against owners amenable to such pressures and for properties in functioning neighborhood real estate markets. But, in areas that have many abandoned properties, owners are unable to obtain the resources to complete repairs and, even in healthier neighborhoods, owners may strategically evade conventional enforcement or be genuinely incapable of fixing up the property or transferring it to someone who can.
In situations where the property-rule entitlement itself prevents a solution, the ultimate real estate liquidation remedy of eminent domain may seem called for. This paper contends that condemnation, in that sense, should be set aside in favor of remedies that liquidate the owner’s interest based upon failure to meet code obligations and/or pay property taxes. Recent scholarship in legal procedures that make use of the boundary area between property-rule and liability-rule entitlements show us the advantages of and design parameters for reforms to existing tax sale foreclosure laws and enactment of in rem code enforcement remedies that will facilitate reconnection of vacant properties with inner-city real estate markets.
Keywords: code enforcement, vacant houses, tax foreclosure, land banking, vacant building receivership, pliability rules
JEL Classification: K11
Suggested Citation: Suggested Citation