Business and Economics

New State Law Deals With Abandoned Housing

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June 19, 2014 —

INDIANAPOLIS – A plan that aims to make abandoned and vacant properties a thing of the past – or at least significantly less detrimental to communities than today – when an abandoned housing law takes effect on July 1.

“Abandoned homes are a poison in the cul de sac,” said Sen. Jim Merritt, R-Indianapolis, the author of the bill. “Home values plummet, there is crime, and it’s just not necessary.”

Merritt said current state law has been punitive to neighborhoods and communities. Until July 1, homes must be vacant for a full year before being redeemed or sold to someone else.
“I’ve always thought that as being wrong,” Merritt said.

That waiting period will soon change to nine months.

Rep. Justin Moed, D-Indianapolis, a backer of the bill, said Senate Bill 422 was created with the help of cities, county officials, community developers, banks, and the Indiana Housing and Community Development agency.

Moed said abandoned properties create more problems than necessary and the bill is a step in the right direction.

“Every day those properties sit they become targets of graffiti, vandalism, and theft. All that does is cost more money down the road and becomes a deterrent for people that want to come in and fix it up,” Moed said.

Under the new law, executives of a county, city, or town must obtain a judgment stating a parcel of real property is vacant or abandoned before a certification can be made to the county auditor for tax sale purposes.

A notice to the record owner of the property must occur during the six months after the tax sale. Current law has it at nine months.

“I don’t see why someone would need that long to notify an owner that they bought their property,” Moed said.

The property will be sold outright at the tax sale, with the buyer acquiring the deed from the county auditor immediately.  Also, the purchaser may petition the court for a judgment directing the county auditor to issue a deed if the property is not redeemed from the sale.

“We have a major problem of abandoned homes in this state with upwards of 25,000 to 30,000,” Merritt said.

He believes the legislation will expedite the redevelopment of abandoned homes.
Moed said the problem with abandoned properties is the ripple effect: People who live next to an abandoned property may be less inclined to pay their mortgages and keep up homes because their property values are going down as well.

“Often times you see one abandoned house pop up and a few months later another one, and another one, and another one,” Moed said. “The other problem that comes up with it is crime. When an abandoned house pops up, people start hanging out in there, causing problems. In the winter time, people will take refuge in an abandoned house and it may catch fire.”

Under the new law, the attorney general will be required to establish and maintain a tax sale blight registry for all people deemed ineligible to participate in the tax sale.

“The easiest way to ensure that you have less bad property sitting around out there is to keep people that have a proven bad record from buying more,” Moed said.

However, under current law, counties are policing themselves when it comes to property. Therefore, one county may not have the same policies and records as the counties surrounding it.
Right now, someone who has a bad property record in one county can go to another county and buy property.

“What we want to be able to do is to be able to have a better communication line open between counties across the state,” Moed said.

Also, foreign business associations will now be prohibited from taking part in the tax sale if they are not registered with the secretary of state. To be in the tax sale, all businesses must provide a certificate of authority from the secretary of state to the county auditor.

Merritt also said that the federal government has allotted Indiana $221 million from the Hardest Hit Fund. The fund aims to help those that have lost their jobs and have mortgages to pay.  “If you apply to the Hardest Hit Fund, you can be granted money to help pay for your mortgage,” Merritt said.

Of that fund, $75 million has been approved by the state federal government to be used to resuscitate neighborhoods, take down homes, and build new things.

Moed said the fund will help cities identify the worst of the worst properties but wanted to see more flexibility from the U.S. Department of Treasury to allow for some of the money to be used for rehabbing.

“It’s not just ‘demo Indiana,’ it’s ‘demo and rebuild,’” Merritt said.

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