Thursday, July 10, 2008

Should Your Realtor Be Held Responsible for Building Fines?

The housing market is in trouble. We constantly hear of foreclosures, multi-million dollar buildings remaining vacant and home owners simply abandoning their homes. Atlanta has run into a different problem, multi-state ownership of buildings makes tracking down people who are legally responsibility for the property difficult. I came across an interesting article in The Atlanta Journal-Constitution about how Atlanta is combating this problem. Fine the listing agent.

Atlanta has been placing hefty fines on agents who represent buildings that incur code violations, back taxes, and unpaid utilities. To say the least this is ruffling the feathers of my Atlanta agents. The agents view this as an attack on already hurting industry, while the city sees the agent as the only person that legal action can be taken against. While I always enjoy reading a good news article, this story hits close to home because of the unique structure of the DC/MD/VA market.

As a city DC has a unique problem, its jurisdiction is a mere 10 miles across. Many of the property owners in DC don’t actually live in DC but can be found across the river in Virginia or located in Maryland. Everyone knows properties aren’t moving like they did a year ago and DC could face a similar problem with vacant properties or buildings that have numerous code violations. As a property investor it makes sense to sit on a property and let it incur violations.

Think about this from the developer’s perspective: my property’s value is at an all time low, I am probably not going to move my property for at least two years, if I sit on my property long enough the value of the property will be worth more than the total violations. There really is no incentive for a large property investment firm to worry about the violation fees.

Now think about it from the agent’s perspective: I try to move properties in a timely manner, I am concerned with all parties involved in the sale, I live in the city where I do business, my reputation is just as important as my results and I am legally bonded to any property that I represent.

Looking at these two logics it makes sense that cities would target agents instead of developers. The agent has much more to lose than the developer... But so does the city. DC is a city that needs development, around every turn we find vacant buildings and underline space, agents work WITH developers to help develop a city. If that city starts attacking its agents, even if the agent is a legal target, than the city runs the risk of driving out one of its strongest catalyst for development.

Currently Atlanta is setting the precedent for this imitative, I have not heard of any other cities trying a similar program, so we will have to watch these developments closely. With DC’s unique geographical/financial/political structure you can be assured that DC city government is also watching Atlanta right now. The real question is this: who is responsible and who will pay, the two aren’t always the same.

Take a look at the Atlanta article; let me know what you think. Do you think agents should be held responsible for the properties they represent? Will DC take a similar stance in the hopes of helping speedily develop the city? Do you think that this is a city’s attempt at attacking an easy political target? I would love to hear from you.

No comments: