• City of Milwaukee Passes New Ordinance Giving Lien Holders the Responsibility for Securing and Maintaining Abandoned Residential Property
  • January 22, 2009 | Authors: Michael J. Ostermeyer; Karen DaCosta Perzan; Kelly Turenne
  • Law Firm: Quarles & Brady LLP - Milwaukee Office
  • On December 16, 2008, the City of Milwaukee passed a new ordinance regulating the inspection and maintenance of abandoned residential properties pending foreclosure. The stated purpose of the ordinance is “to establish an abandoned residential property registration program and to regulate the maintenance of abandoned residential properties by parties asserting a collateral or other legal or equitable interest in the property.” This new ordinance affects banks, lenders and other financial institutions and their agents and servicing companies. "Agents" include any entity that, by agreement for payment of services, is responsible for securing, maintaining, foreclosing upon or selling any residential property as a result of default, or any attorney if not retained only to represent the lien holder in connection with the foreclosure proceeding.

    Under this new ordinance, whenever a bank, lender or other financial institution — directly or through an agent or servicing company — initiates foreclosure proceedings upon residential real property, it must directly or through its agent or servicing company cause a physical inspection to be made of the property within 30 days after the filing of the foreclosure proceedings. Re-inspections must be made at least once every 30 days following the initial inspection until such time as the property is no longer in default, is sold at a sheriff’s sale or is otherwise lawfully conveyed to a new owner. Written records, including dated photographs, of all inspections must be maintained. The records should identify any change in condition of the abandoned property requiring correction and specify actions taken or planned to assure compliance.

    If, upon any of the inspections, it is determined that the property is abandoned, the bank, lender or other financial institution, or its responsible agent or servicing company, must register the property in the name of the lien holder with the commissioner of neighborhood services, on a form to be prescribed by the commissioner. Registration of abandoned property must be completed within five working days of inspection and carries a fee of $35. The registration will remain active until the commissioner receives written evidence of a sale in foreclosure, redemption of the property by the lien holder or other transfer of the lien holder’s interest.

    While the registration is active, the registrant is responsible for maintaining and securing the property. The enumerated property maintenance duties of a registrant are (1) assuring that there are no accessible structures on the premises (i.e., buildings that are accessible through a compromised door, wall, window or similar structure and which are unsecured in a manner that allows access by unauthorized persons) and (2) assuring that there are no conditions upon the property presenting an immediate risk to the health and safety of the public, including removing or abating fire hazards; removing or containing potentially toxic materials and explosives; securing the perimeters of swimming pools, ponds or other bodies of water; and keeping public walkways and thoroughfares free from ice, snow, mud and other debris. The minimum requirements of a registrant will be generally consistent with the regulations, instructions and other requirements of the Federal Housing Administration (FHA) of the United States Department of Housing and Urban Development (HUD) for the preservation of single-family residential properties secured by FHA loans, as applied to the state of Wisconsin, including guidelines related to winterization and heating systems.

    In addition to the maintenance requirements listed above, the commissioner may make a finding that the conditions of the residential premises constitute an immediate threat to the health, safety and welfare of the public and, upon such finding, may issue a written order to the registrant to abate the condition. The registrant will have 10 days to comply with the order or it will be held liable and punished in the same manner as the owner of the property, if the unabated condition is found to be in violation of certain specified ordinances1.

    Penalties for failure to comply with the ordinance are as follows:

    • Failure to inspect or re-inspect property carries a penalty of between $250 and $1000 and, in default of payment, imprisonment of between 10 and 40 days.
    • Failure to register abandoned residential property carries a penalty of between $500 and $2,000 and, in default of payment, imprisonment of between 20 and 80 days.
    • Failure to secure or maintain a registered premises carries a penalty of between $350 and $1,500 and, in default of payment, imprisonment of between 14 and 60 days.
    • Failure to maintain records or to provide required notices carries a penalty of between $100 and $500 and, in default of payment, imprisonment of between 4 and 20 days.

    On the whole, this new ordinance places an additional burden on banks, lenders and financial institutions with interests in residential real estate located in the City of Milwaukee. When a lien holder or its designated agent or servicing company forecloses on residential property, the lien holder as well as its servicing company or agent now have the obligation to conduct regular inspections and keep records, and if the premises become abandoned, the duty to secure and maintain the premises in accordance with the ordinance.

    1These ordinances include the following:
    Section 79-12. Littering of Premises.
    Section 79-13. Sidewalks to be Kept Clean.
    Section 80-13. Odors from Pricy Vaults, Drains, Sewers.
    Section 80-17. Hay Fever Weeds, etc.
    Section 80-31. Breeding Place for Flies.
    Section 80-49. Nuisance Vehicles.
    Section 105-16. Icicles on Buildings.
    Section 214-11. Storing of Fuel in a Dwelling.
    Section 214-12. Securing of Pressurized Gas Cylinders.
    Section 217-13-4. Locks.
    Section 236-41. Hazardous Substance Spills.
    Section 275-32-7. Vacant Structures; Boarding.
    Section 275-35. Graffiti Abatement.
    Section 275-81-5. Maintenance of Premises.
    Section 275-81-6. Rat Harborages.
    (all references are to City of Milwaukee Code of Ordinances)