By David Unger

October 19, 2011


At a Chicago city council committee meeting Monday, Ald. James Balcer (11th) raised a seemingly simple question. The topic was proposed changes to the city’s vacant property ordinance.


“If you’re in foreclosure,” he asked, “up until the bank takes possession, who is responsible then from point A to point B? Who has the responsibility of maintaining the property?”


Like hot potatoes passed hastily from hand to hand, vacant properties raise questions about ownership and responsibility. In between a property’s default and its foreclosure–as weeds overrun yards and pipes burst–who should care for the property?


The banks, say many, including some aldermen, Chicago residents and the Occupy Chicago protesters at LaSalle Street and Jackson Boulevard. Since the legal owner is effectively out of the picture, the mortgagee–typically a bank–has a financial interest in the property. Therefore, many say, the banks have the responsibility to maintain it.


Indeed, responding to Balcer’s question about responsibility, Judith Frydland, an attorney with the city, responded, “Well, under this ordinance, the mortgagee.”


The issue of responsibility for vacant home has touched a nerve in many communities. The grass-cutting and window-boarding-up is often left to neighbors, the aldermen say, and sometimes even to the aldermen themselves.


“I understand that banks are allowed to use the legal system to skirt their ethical and moral responsibilities, and that’s just part of our legal system,” said Ald. Scott Waguespack (32nd). He has tried repeatedly, he said, to contact a bank in California to take care of a building in his ward. “I kind of find it abhorrent, but that’s the way it’s set up.”


In legal limbo


Monday’s testy committee meeting suggests that the city’s policy on vacant buildings walks a fine line. By holding banks accountable, the city could be sued for infringing on lending practices.


A proposed amendment to the ordinance would help protect the city against litigation, city lawyers say. But, they caution, it’s no silver bullet.



“The measure before you does create some refinements away from the title of ownership that I gather was especially legally problematic for the mortgage holders,” said Jeffrey Levine, chief assistant to the city’s corporation counsel.


City lawyers are concerned that Chicago’s ordinance could conflict with the Illinois Foreclosure Act. The act, they say, prohibits treating banks as legal owners of a vacant property before they take possession.


The best option for the ordinance’s supporters, the lawyers say, is to work with lawmakers in Springfield. A change in state law could hold banks more accountable for properties they have an interest in, but do not legally own.


Aldermen pressed the city’s legal team several times, asking if the amendment would, in the meantime, legally protect the city and allow them to move forward with enforcing the ordinance. Levine told aldermen that the amendment would clear up some legal concerns. But he gave no firm response to questions about whether or not the city could still be sued for enforcing the ordinance.


Ald. Timothy Cullerton (38th) tried to clarify the legal team’s stance.


“I think I heard you say that–even with this ordinance change–we don’t hold the upper hand legally in the prosecution of these cases. Is that correct?”


A lengthy silence passed as the city’s legal team conferred privately. Twenty-two seconds later, Levine responded, “Alderman, that’s essentially correct.”


Responsibility vs. ownership


Backers of the vacant property ordinance say that banks have an ethical and moral responsibility to care for the property, even if they are not the legal owners.


“We don’t care whether they’re an owner or not an owner. You should be held to the same duty,” said Adam Gross who works on housing issues for Business and Professional People for the Public Interest. “Servicers are stewards of the property. They need to preserve the value of that property.”


Tom Feltner, vice president of the non-profit Woodstock Institute, works on consumer lending policy and research. He agreed the banks are inattentive to properties they have a stake in.




“From our perspective,” he said, “they are the stewards of that property in the event that the owner is no longer occupying the property.”


At Monday’s meeting, Frydland reaffirmed the argument for holding banks accountable after an alderman attacked her testimony for coming across as pro-bank.


“The community didn’t give the loan to the owner,” Frydland said. “The city didn’t give the loan to the owner. The mortgagee gave the loan to the owner. They’re the ones that have an interest in the property. They’re the ones, I personally believe, that have to step up to the plate if the owner is gone. Somebody has to take care of the building, and it shouldn’t be the taxpayers of the City of Chicago.”


It’s an argument that many across Chicago, and the nation, agree with. But nagging technicalities remain.


Towards the end of Monday’s meeting, the question of legal protection was once again raised.


“Passing this ordinance does not reduce our vulnerability to a lawsuit?” Ald. William Burns (4th) asked.


Ald. Pat Dowell (3rd), a sponsor of the original ordinance and the proposed amendment, responded simply, “We’re still vulnerable.”


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