A Modest Proposal to Require Short Sale Owners to Pay Before They "Delay"

Some very nice and truly decent people got hurt by the decline of the housing market in Key West. While the number of new foreclosures has reduced dramatically over the last two years, the fact is that there are still many pending foreclosures winding their way through the courts. Foreclosures occur when borrowers stop making their mortgage payments. Most lenders collect a portion of the annual insurance and property tax liability as a part of the monthly mortgage payment to the lender. When borrowers stop paying, the property owner is no longer paying for insurance or property taxes.

Some borrowers accept their fate and do not respond to the Complaint in Foreclosure that is filed in the courts. When a Complaint in Foreclosure is not contested, the real property is normally sold at public auction within a few months after the original complaint is filed. However, if a borrower contests the foreclosure the process can be extended for months or years. That is not a typo. A lawyer can delay the day of reckoning by filing motion after dilatory motion with the singular purpose of delaying the date the case gets in front of the judge. The result is the borrower either stays in the house without paying anything or perhaps rents the property and collects rent - again, without paying anything.

Property taxes pay for police and fire protection, school teachers, public street maintenance, and those ladies and gents at city hall or the county clerk's office. Somebody has to pay all of those salaries and costs to run local (city and county) government. Failure to pay one's fair share of taxes means the rest of the taxpayers must pick up the difference.

Failure to pay insurance may seem not such a big deal until you consider what happens if a house burns down or someone is seriously injure or killed because a building is not maintained. Insurance exists to protect not only the insured, but also those who are lawfully on the premises of the owner.

Property owners in foreclosure who continue to rent their properties and collect rent, typically do not pay any property taxes or pay for any insurance. I recently got a phone call from a woman who complained about living in a house I wrote that was offered for sale as short sale. That property is in foreclosure. The air conditioner had stopped working and the landlord refused to fix it. The rental agent (not a licensed Realtor but a friend of the owner - itself a violation of Florida law) said the owner will eventually lose the house in foreclosure and will not spend any money to fix the air conditioner. The owner refused to give the lady any price concession on rent. I suggested she contact Key West Code Enforcement. But I question whether Code Enforcement has the legal tools necessary to make a scumbag landlord fix the air conditioner or any other part of a house that is in disrepair.

If the real property happens to be located in a condominium or townhome association, the delinquent borrower normally does not pay association fees as well. The effect on other property owners in those associations is to increase how much money they must pay to cover annual budget expense or to cut services. My proposal can't fix this problem, but enactment could diminish scumbag borrowers from profiting at the expense of other owners. There is nothing like a neighbor scorned. Illegal rentals will get shut down. Pronto.

I propose the City of Key West add two mandatory provisions to its existing criteria for an owner to obtain or to renew a non-transient rental occupational license. One, an owner must provide proof of fire and general liability insurance and, two, provide proof of payment of real property taxes for the subject property for the prior year. Any owner that cannot provide proof of either should have the occupational license immediately suspended and any tenants should be required to vacate.

Property owners who are in foreclosure and who continue to rent property and collect rent but who do not insure the property or pay property taxes are scumbags. They only want money to enrich their lives while they take advantage of a court system over-whelmed by too many cases that require due process trials. While we can't change the system, we can prevent scumbag owners and their sleazy lawyers from profiting from the delays they cause.

Driving a car is not a constitutional right. The government requires that drivers be licensed and most states require that drivers have mandatory insurance coverage of some sort. Renting real property is also not a constitutional right. States and local government routinely impose rules that govern how a property owner may rent real property.

The City of Key West currently requires street performers to provide proof of insurance before issuing an occupational license. I see no difference in requiring an owner (landlord) to produce proof of insurance and payment of real property taxes as a condition precedent to granting a non-transient occupational license or to renewing such a license. It is a requirement all property owners should have to fulfill both now and in the future.

If you think this idea has merit, you may want to contact any or all the Key West City Commissioners or the Mayor listed below. Click any link below.

Jimmy Weekley District One

Mark Rossi District Two

Billy Wardlow District Three

Barry Gibson District Four

Teri Johnston District Five

Clayton Lopez District Six

Craig Cates Mayor

My proposal is modest but adoption of a new ordinance embracing the spirit could be beneficial to all members of our community.