Council to consider proposal to force banks to better maintain foreclosed properties

A proposal aimed at forcing banks to better maintain vacant, foreclosed properties will advance to the Las Vegas City Council.

The proposed ordinance, which includes potential criminal penalties, passed the city’s recommending committee Tuesday. It could be voted on by the City Council as early as Dec. 7.

The proposal seeks to make banks step in sooner than they currently do to fix broken windows, clean landscapes and remove trash around dilapidated houses and commercial buildings.

It comes as Las Vegas is facing as many as 300 distressed properties going vacant monthly, and council members are looking to stop empty houses from blighting entire neighborhoods.

Current codes allow city officials to order workers to clean up offending houses and slap liens on the properties to cover the costs plus interest and penalties.

But Ward 6 Councilman Steve Ross, who proposed the ordinance, said Tuesday that is only burdening potential buyers with higher costs.

Ross said the ordinance he has proposed would prompt banks to step in earlier and prevent properties from becoming eyesores.

"Currently the city of Las Vegas is the epicenter of this nightmare," Ross said. "It is not something we need to be proud of; it is something we need to take care of."

The proposal would create a registry to which banks would report vacant, foreclosed homes.

Under the plan banks, or anyone who holds the note on a deed of trust, would need to inspect the property within 10 days of filing a notice of default.

If the inspection finds the property is vacant, the note-holder would have another 10 days to list it on the registry at a cost of $200.

The city or utility companies could refer to the registry when investigating complaints of poor maintenance or to ensure water and power connections are secure.

The note-holder would be required to post a notice on the property with contact information for a local property manager who could respond to complaints.

Properties on the registry would be required to have clean landscaping, secure gates and windows and be free of safety hazards.

Violating the ordinance would be a misdemeanor with penalties of up to $1,000 or six months imprisonment.

Chris Knight, director of the Department of Building and Safety, said that without the ordinance, properties tend to deteriorate between the time a homeowner vacates after a notice of default and before the bank officially takes possession, which can take many months.

"There is that gap of time it appears no one is responsible for maintaining that property," Knight said. "That is what this ordinance is trying to do; it is trying to fill that gap."

The proposal raised at least one objection from Bill Uffelman, president of the Nevada Bankers Association, who said the proposed penalties are too harsh.

"I don’t know of any bank who has a senior vice president doing time in the city of Las Vegas," Uffelman said.

The quip brought a quick response from Councilman Bob Coffin, a member of the recommending committee who criticized unregulated banking practices for contributing to the foreclosure crisis and recession.

"It is not out of the question, though," Coffin said.

Val Steed, an attorney for the city, said the stiff penalties make sense.

"If there is no penalty whatsoever, all it is is a suggestion," Steed said.

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-229-6435.