Legal League 100’s Special Initiatives Working Group (SIWG) [1] has authored an extensive white paper titled “Abandoned Property Law: A State-by-State Review of Existing Law and/or Administrative Mandates That Can Assist Servicers and Attorneys in Determining Whether a Property is ‘Abandoned.’” [2]
Legal League 100 supports the mortgage servicing industry through education, communication, relationship development, and advisory services. Its SIWG is comprised of senior representation from member firms and executive level associate members with a focus on the strategic objectives of concern to financial services legal professionals.
The paper examines each of the 50 states and what defines a real property as being considered “abandoned.”
“Over the past 19 months, the Federal Housing Finance Agency has mandated holds for most GSE loans in default in response to the COVID-19 pandemic, which caused so many blameless Americans to struggle financially,” said the white paper [2]. “’Abandoned’ properties were one exception to this mandate, because if a property was abandoned, no resident would be displaced from the home, thereby eliminating policy concerns.”
The goal of the paper is to provide guidance and clarification on what constitutes a real estate property to fall under the category of “abandoned.”
The authors of the paper break down the difference between properties that are “abandoned” and those that are deemed “vacant.” According to the paper, a property is considered “abandoned” when the owner has “no intentions of returning to the property or caring for it.” Meanwhile, a “vacant” property is one in which “no one appears to be living in it.”
Characteristics of each include:
- Is the property in a state of dilapidation?
- Are the utilities on?
- Is the exterior unkempt?
- Is there mail being delivered?
- Does the property contain personal items within?
- Does the property meet municipal code standards?
- Are there automobiles present?
- Are the windows broken or boarded up?
Also addressed is just who it is that determines the property as abandoned. Each state has their own determination, but the factors weighed include:
- Can a servicer unilaterally decide if the property is vacant or abandoned?
- Does there have to be an affidavit signed by a servicer certifying the vacancy?
- Do local code enforcement officers have to review and sign a certification of abandonment?
- Can a local property inspector retained by a servicer make the decision?
- Is there any judicial involvement in determination of “vacant” or “abandoned?”
“Abandoned Property Law [2]” was prepared and compiled by the following members of the Legal League 100’s SIWG: Chair Brooke E. Sanchez Esq. [3] of Kent McPhail & Associates LLC [4]; Vice Chair David Demers Esq. of Cooke Demers LLC [5]; SIWG Member Ryan Bourgeois Esq. of Barrett, Daffin, Frappier, Treder & Weiss LLP [6]; SIWG Member David Friedman Esq. of Van Ness Law Firm PLC [7]; SIWG Member Michelle Garcia Gilbert Esq. of Gilbert Garcia Group P.A. [8]; SIWG Member Seth J. Greenhill Esq. of Padgett Law Group [9]; SIWG Member and Legal League 100 Chairman Stephen M. Hladik Esq. of Hladik, Onorato & Federman LLP [10]; and SIWG Member and Legal League 100 Vice Chairman J. Anthony Van Ness Esq. of Van Ness Law Firm PLC [7].
[2]