Washington trots out new weapon for cities in the fight against ‘zombie’ properties

City officials in Spokane and around the state will get a new weapon to fight off “zombie” properties starting in June, when a new law that is the product of more than a year of negotiations takes effect.

The law, passed in the final week of the 2018 legislative session, will allow cities to notify lending institutions about properties in the midst of foreclosure that are creating a nuisance, safety or health hazard to a neighborhood.

Lending institutions will get notices to fix problems, such as cutting tall grasses or weeds during fire season, taking steps to prevent illegal occupancy or clearing trash being dumped on the lawns. If they don’t, the city can hire the work out and bill the lending institution.

“It’s absolutely heartbreaking,” Spokane City Councilwoman Candace Mumm said of the number of abandoned properties dotting the city map. “It really affects the rest of the neighborhood.”

The city was blocked from many efforts to force lending institutions to clean up properties that sit empty during foreclosure because of a state Supreme Court ruling in 2016. Over nearly 14 months of negotiations with representatives of lending institutions and consumer advocacy groups, along with other cities facing their own zombie property problems, legislators led by Rep. Tina Orwall, D-Des Moines, hammered out a compromise after the original proposal seemed to die in the 2017 session.

The city didn’t get everything it wanted, Councilwoman Kate Burke said. “But it’s a really good step in the right direction. It’s absolutely going to help us clean up.”

The city has as many as 1,500 properties in some stage of foreclosure, Mumm said. But not all are abandoned and falling into disrepair.

The city has hired a private company to compile a registry of abandoned properties that are presenting problems. Melissa Wittstruck, of the city’s Office of Neighborhood Services, which includes Code Enforcement, said the registry currently has 455 properties where the responsible owner or lending institution has been notified it is being listed. Another 200 properties have been identified as having problems and the company is in the process of tracking down and notifying the responsible party, which can be difficult or time consuming for a house going through foreclosure.

The registry also is used by police, fire and utility departments when responding to calls at an address, alerting them to potential problems with squatters or possible illegal activity at a house that’s supposed to be empty. With utilities off, illegal occupants sometimes cook or keep warm by building fires inside, which get out of control.

Some properties have been abandoned for a year or more, have roofs that are failing or damage from trees that fell in a storm, Wittstruck said.

More common is untended lawns that grow tall then dry out in the summer, creating a fire hazard, or broken windows or doors that need to be boarded up, garbage piling up in the lawn and creating a health or safety problem.

The law, which takes effect June 7, allows the city to send the responsible party a notice of the problem and directions to fix it. The responsible party has 15 days to respond and another 15 days to comply. If the notice is ignored, the city can hire someone to do the work and bill the responsible party. If there’s no payment, the city can place a lien on the property and eventually recover the costs, either through tax payments or a collection when the property is sold.

The law has no limit on the amount a city can bill, but Spokane isn’t going to hire someone to rehabilitate a failing structure, Wittstruck said. It will hire workers to clear vegetation, haul trash and board up the property to keep squatters out.

Negotiations with the lending institutions led to a requirement that the city’s notice include a sworn affidavit that the property is abandoned or a nuisance, and photos of the problems stamped with time and date.

But the law also included a provision that cities that take action to clean up or secure an abandoned property don’t have any liability as long as they follow the law, she said.

Sought by the city in early 2017, the bill seemed to die at the end of last year’s extended session, but financial institutions, consumer groups and city officials began meeting in the fall to work on reviving it. Between November and February, there were weekly meetings, often by phone, with calls lasting from two to four hours, Wittstruck said.

Other cities that are also seeing a problem with zombie properties, including Spokane Valley, Tacoma and SeaTac, joined discussions. Orwall, who sponsored the bill that eventually passed unanimously in the House and Senate, said the goal was to give cities a mechanism to work on cleaning up the properties.

The cities can take the lead on identifying the properties, and develop partnerships with financial institutions to clean them up, Orwall said. If the bank declines, the city can have the work done and get fully reimbursed because there’s no cap on the liens.

The city is developing procedures for handling zombie properties once the law takes effect, Wittstruck said. It already notifies anyone with a financial interest in an abandoned property with problems that must be addressed.

“Rarely will they do anything,” she said, because they’ll cite the 2016 state Supreme Court decision that makes it difficult for a lender to enter a property before foreclosure proceedings are complete.

After June 7, Spokane and other cities in Washington will have a new statute and a new response, Wittstruck said.

“Here’s your legal authority to do it. If you don’t, we’ll do it,” she said.