Monday, July 26, 2010 | 2 a.m.
IMPOSING PENALTIESLas Vegas charges $120 to $500 a day in penalties for violations while North Las Vegas can charge up to $1,137. Henderson issues $100 citations for first offenses, but if the problem isn’t addressed, fines can increase to $500. The city can also pursue criminal charges, which could lead to more fines and possible jail time.
NOBODY'S HOMEThe problem of foreclosed homes falling into disrepair is partly the result of owners being evicted by lenders who don’t swiftly foreclose on the properties, leaving them in limbo with nobody maintaining them. It could be a strategy to avoid taking responsibility for properties and pay homeowners association fees. Steve Thompson of Blue Wave Pool Service drains a pool at a foreclosed home in Henderson last week.
Across the valley, local governments are using fines and other tactics to pressure owners and lenders to more quickly repair and sell abandoned houses before they become eyesores.
Clark County, for instance, has begun requiring owners to submit a plan for rehabilitating properties that have fallen into disrepair or face a $1,000-a-day penalty. Unpaid fines can trigger property liens.
North Las Vegas is considering raising fees to cover the expense of dealing with such code violations as broken windows, unsecured doors and unmaintained yards and pools, and Henderson is considering forcing banks to take possession of foreclosure properties faster.
But the property owners are complaining, saying such strategies will add to the cost of the house when it’s put on the market.
“If these fines accumulate, is anybody going to buy it?” said Bill Uffelman, president of the Nevada Bankers Association.
Joe Boteilho, the county’s chief code enforcement officer, says the problem of foreclosed homes falling into disrepair is partly the result of owners being evicted by lenders who don’t swiftly foreclose on the properties, leaving them in limbo with nobody maintaining them.
Boteilho said the county is trying to address the problem for which it issued about 1,000 citations in 2009.
“We have gotten the word out that Clark County is not going to tolerate this,” he said. “(Neighbors) shouldn’t have to deal with their property values going down because owners aren’t maintaining their properties.”
But banks and investors say some of the more aggressive solutions might actually end up exacerbating the problem.
Uffelman said the county could “destroy the reasonableness” of the foreclosure process if it gets too aggressive with its fines.
“If the defaulting borrower is not paying his mortgage or homeowners association fees, he couldn’t care less if the county throws more fees on them,” Uffelman said.
Financial institutions don’t own the property until the foreclosure sale, and their interests should be protected, too, he said. Once the lender is the owner, it will do what it can to comply, he added.
The county can also impose a penalty of up to $10,000 or charges of three times the cost to abate problems.
“It is not a moneymaking venture,” Boteilho said. “The board looks at it on a case-by-case basis to waive or reduce those fees. It costs a lot less to take care of the property than pay a $1,000 fine for one day.”
Some Las Vegas Valley municipalities struggling with the same issues think Clark County is going too far.
“I think what (the county) is doing is going to have a negative impact and is more about revenue generation,” said Alan Ellis, Henderson’s inspection services manager. “When you start liening houses, it discourages people from buying houses.”
In Henderson, he said, “we are looking at changes that aren’t to make money or collect liens, but get compliance.”
Henderson issues a $100 citation for a first violation and gives property owners 14 days to address the problem. If it isn’t addressed, the owner faces a $250 citation and if the problem is not corrected in another two weeks, the fine goes to $500.
The city will pursue a criminal citation against the owner — which could lead to fines of up to $1,132 per violation and possible jail time — as the next step, Ellis said. Henderson issued about 50 administration citations and fewer than 10 criminal citations last year.
If the property needs to be cleaned up and the owner isn’t responding, the city does it and absorbs the cost, Ellis said.
His city doesn’t place liens on the property because they could take years to collect and the city doesn’t want to worsen the problem and prevent the properties from being sold, Ellis said.
Henderson has 4,000 homes in the foreclosure process and the majority are vacant, Ellis said.
“We are spending a lot of time and resources to maintain properties that the bank should be maintaining, but unfortunately we have to work with the legal owners of the property,” Ellis said.
Ellis agreed that the unwillingness of banks to foreclose and take possession of the property after they evict the owners is often the problem. It appears to be a strategy to avoid taking responsibility for properties and pay homeowners association fees, he said.
Henderson is looking to work with the state Legislature in the 2011 session to require banks to take possession of homes 30 to 60 days after they are vacated, officials said.
Tom Goyda, vice president of government relations for Wells Fargo Home Mortgage, said his bank has a team that identifies vacant homes and maintains them.
“I can’t speak to what others do,” Goyda said. “There are a lot of other services out there.”
In North Las Vegas, the maximum fine is $1,137 per violation, and the city retains the ability to place liens for the cost of abating a problem. From July 2009 to June, the city issued 450 citations to homeowners and 90 percent of the cases were resolved.
The city is considering charges to recover its costs for the code enforcement process.
“The entire Las Vegas Valley has been hit so hard with the economic downturn that scores of homes have been in default or foreclosure,” said Kevin Brame, the city’s deputy fire chief, who heads the city’s code enforcement. “It is a fairly big problem, and if you are living next to a home in default and people walk away, it sits there for months and all the vegetation dies and trash collects and it falls into deterioration.”
Las Vegas charges $120 to $500 a day in penalties and has the ability to place liens on a property.
It hasn’t announced any plans to change its codes.
A version of this story appears in this week’s In Business Las Vegas, a sister publication of the Sun.