According to data from LendingTree, more than 5.6 million housing units currently sit empty in the nation’s 50 largest metro areas. Soon, many of the people who own those vacant houses will be required to register them with local government agencies -- if they are not already.
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The so-called vacant property registration movement stems from the 2008 financial crisis, when many strapped homeowners abandoned their houses, allowing them to go to seed and into foreclosure. Even after lenders took ownership of these houses, they often allowed them to sit empty rather than list them at fire-sale prices.
As a result, many deserted properties became eyesores in otherwise thriving communities: Lawns became overgrown. Windows were broken. Utilities were cut off. Sometimes, squatters moved in.
ATTOM Data Solutions says that in this year's third quarter, about 223,000 so-called zombie houses -- ones that were abandoned before the foreclosure process began -- were moving through foreclosure. That may sound high, but the number is merely a blip in the country's total housing stock.
“After some worries about a rise in abandoned homes following the end of the COVID-era foreclosure clampdown,” said ATTOM CEO Rob Barber in a recent news release, abandoned properties “remain an anomaly throughout most of the country. ... (F)ewer owners are simply walking away from their properties like so many did after the Great Recession of the late 2000s.”
Nevertheless, more and more municipalities are enacting ordinances to account for empty dwellings and to make sure their owners -- individuals and banks alike -- actively maintain and manage their properties. And now the practice has spilled over to include holiday homes.
Making sure houses don’t become a pimple on the local landscape is usually the stated reason for these regulations. But what goes unsaid is that registrations are a source of revenue -- sometimes a huge source -- for cash-starved jurisdictions.
Rates vary widely: Henderson, Nevada, charges a whopping $848 to register (and annually renew) a short-term rental property, while Nags Head, North Carolina, charges a paltry $25.
If you fail to follow the law, the charges can quickly escalate. In the Village of North Palm Beach, Florida, failing to register a rental can result in civil penalties, such as court costs and administrative fees. In Sarasota, Florida, applications cost $500 and renewals cost $350 -- but missing the deadline to register adds a $200 late fee to the tally.
The District of Columbia's policies may be the toughest to swallow, though. Once you register a vacant house with the district, your tax rate jumps from 85 cents per $100 of appraised value to $5 per the same. One attorney told me the district is known to check water and electricity bills in an effort to find unregistered vacant properties. If they catch a scofflaw, or if a place is considered blighted, the tax rate jumps to $10 per $100 of assessed value.
The message is clear: Find out what your local rules are, and follow them.
If you own a vacant house, or rent out your house on a seasonal or irregular basis, find out if your local jurisdiction requires you to register it. Also, you may be in breach of your mortgage by allowing a property to sit vacant, and could be violating the occupancy terms of your insurance policy. So check those rules, too.
Unfortunately, “registration requirements change frequently,” writes Jeff Connell, a senior vice president at property preservation company MCS, in an April post on MortgagePoint.com. So you have to be on your toes.
Connell keeps his fingertips on new and/or changing local laws, and he says property owners should follow his lead.
Not only must owners make sure they keep up on registration laws, but they also must ensure their vacant properties are maintained in accordance with specific local requirements and standards: The grass must be kept to a certain length, for example, and the flower beds must be free from weeds high enough to overtake the shrubs. Local rules may require you to rake the leaves, clean up any storm debris, repair broken windows and fences -- and, above all, make sure no people have occupied your property without your permission.
Connell also suggests trying to build a relationship with the agencies that enforce local codes. He writes that doing so “can help with compliance, and even negotiate the severity of fines if an issue does arise.”