Frustrated by the increasing number of foreclosed properties sitting vacant and untended, cities across the country are responding with ordinances that require the owners--the lenders that took back the houses--to maintain the properties or face heavy fines. 

The California legislature is expected next week to pass a statewide law that would allow local governments to assess a fine of up to $1,000 a day on the owners of foreclosed properties who don’t maintain them. The bill also has strict requirements for notifying mortgage holders that the foreclosure process has started, and gives tenants living in a foreclosed property additional time to move. Considered an urgency measure, the bill would take effect immediately after being signed by the governor.

The Rhode Island General Assembly also has sent its governor a bill to sign, the Rhode Island Foreclosed Property Upkeep Act. It requires any financial institution that purchases a foreclosed property to post a bond with the municipality for 25 percent of the property’s assessed value, to be used to correct any code violations if the owner doesn’t take care of it. If the full value of the bond is used in the upkeep of the property, the owner has 10 days to file another bond in the same amount or have the property forfeited to the municipality.

Cathedral City, located in what was once the white-hot real estate market of Riverside County, Calif., is one of the cities that has recently passed laws requiring owners of foreclosed properties to register the property with the city. Among other requirements, the ordinance requires owners to pay a $70 annual registration fee, secure the property, keep it free of debris, landscape the front and side yards to neighborhood standards, clean or drain the pool, and hire a local property manager to inspect it weekly.

The procedures for enforcing the ordinance, which was passed this spring, are still being worked out, says William Soqui, chief of the Cathedral City Fire Department, which oversees code enforcement for the city.

He’s thrilled to have a mechanism to address the problems associated with the 2,000 foreclosed properties currently sitting vacant in this California desert community. The empty houses have been broken into by gang members and drug addicts, who vandalize them or use them as bases for criminal activities. Stagnant swimming pools have created breeding grounds for mosquitoes and drowning hazards.

“Keeping them crime-free and making sure they’re secured and in a condition that they’re not dragging down other property values is a daunting task,” Soqui says.

The ordinance addresses the biggest problem his department has with foreclosed properties, which is simply keeping track of who owns it.

“We’ve had to hunt for the owners and that’s been difficult,” Soqui says. “The loans get sold from one company to another. This is for us to have someone we can contact on our local level to deal with issues going on at a specific property. We can’t do anything about the foreclosure, unfortunately, but we can bring the property up to the standard of the community.”

Pat Curry is senior editor for sales and marketing at BUILDER magazine.

Learn more about markets featured in this article: Riverside, CA, Los Angeles, CA.