The city of Chula Vista has been among the fastest growing communities in California over the last decade. With this growth came the rapid development of single-family homes. But, when the foreclosure crisis hit the nation, many of these homes were abandoned by their owners. A majority of mortgage lenders only exacerbated the problem by letting homes fall into disrepair during the lengthy foreclosure process, claiming that they did not yet "own" the house and therefore would be trespassing. Lenders ignored the Abandonment and Waste Clause that is part of every mortgage contract, which gives the lender the right and authority to enter, secure, and maintain properties that are abandoned in order to protect their collateral. Vacant homes around the city began to discourage potential buyers of neighboring properties.
Research from public and private entities indicates that just one abandoned property can diminish property values up to one-eighth of a mile away. And, it is not unusual for foreclosed homes to become a hive of criminal activity for gangs, drug dealers, and prostitutes.
Chula Vista's Building Code Enforcement Division needed a way to hold mortgage lenders accountable for the state of these homes. In 2007, at the division's behest, the city council enacted the Abandoned Residential Property Registration Program (ARPRP). The ARPRP requires lenders to inspect defaulted properties to determine whether they are occupied. If a property is vacant, the lender must exercise the Abandonment and Waste Clause, register the property with the city, and immediately begin to secure and maintain the property to the neighborhood standard. The law provides for daily fines of $100 to $500 for noncompliance.
In addition, lenders must hire a local company to inspect the property on a weekly basis. The property must be posted with the name and contact number of the company responsible for the weekly inspection, maintenance and security of the property. Previously, the Building Code Enforcement Division had to spend limited resources to act as property manager.
Getting the attention of lenders, who represent national and multinational interests, has been the biggest hurdle to implementing the ARPRP. Through leveraging fines and educating them about the benefits of better business practices, the city has gotten the mortgage industry to respond to these vacant abandoned properties sooner. Lenders are discovering that it is more cost-effective to be responsible and maintain their collateral, than allow it to deteriorate, be fined, and still have to bring the property into compliance. Several California and Florida communities have already replicated the Abandoned Residential Property Registration Program, and Chula Vista's Code Enforcement Division has received consultation requests from over 350 jurisdictions nationwide.