The Atlanta Journal-Constitution
Published on: 07/09/08
Atlanta real estate agents trying to weather the slumping market by selling foreclosures have run into an unexpected problem with a city government tired of neighborhoods overrun with derelict properties.
City code inspectors have begun ticketing some listing agents, holding them liable for code violations on run-down properties they are selling, often for out-of-state institutions.
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Several agents with similar properties have been hauled into court over the past few weeks — yet another offshoot of a foreclosure crisis that's spread across the region but hit certain intown neighborhoods especially hard.
Agents, already under pressure from declining sales, say the city's unfairly picking on them because they are easy targets. The city, they say, should be applauding their efforts to get foreclosed properties into the hands of new owners who will properly care for them.
City officials say they just want some of the blight cleaned up.
Rick Hale, a Midtown agent who represents lenders with properties in some of Atlanta's toughest neighborhoods, said he'd never heard of agents being ticketed until he got cited in May.
Hefty fines could scare some agents away from representing run-down housing and drive agents out of the business.
"Realtors are hurting right now," said Hale. "This is not cool. They think we are just going to get reimbursed. But it doesn't work that way. They are going to ruin some careers over this."
The Atlanta Board of Realtors has set already organized a meeting between some agents and the city to soothe some of the tensions.
Robert Broome, governmental affairs director for the Atlanta Board of Realtors, said he understands Atlanta's efforts to get run-down properties in shape. However, he says he's not for slapping fines on every agent who lists properties needing rehabilitation.
"The situation in several neighborhoods in Atlanta is tragic," Broome said. "We are as distressed as anyone about the conditions. I am afraid there may be a little bit of going after the low-hanging fruit — if there's a sign out there, the agent is an easy target."
Hale's been cited for a building he listed for sale at 950 Bolton Road in northwest Atlanta, part of a former apartment complex now abandoned and vacant.
Hale said when he got the citations — eight of them, one for each unit in the building — he thought it was a mistake or a joke. He said he had the building professionally boarded only to see miscreants break in over and over.
Hale said he was advised to plead no contest because that would quickly resolve the dispute and let him get back to work.
He was shocked when the city court socked him with $3,311 in fines last month.
"This is a huge stretch and an injustice," Hale said.
With the buildings owned by several different lenders, an outstanding water bill north of $150,000 and a rough-and-tumble community around the complex, Hale said he couldn't even get an offer with a $12,500 asking price. He has since lost the listing even though he paid the fine.
Hale's also been ticketed for a building at 930 Garibaldi St. and faces a court date in August. Hale intends to fight that one.
Buildings like the ones on Garibaldi and Bolton are scattered around the city but heavily concentrated in communities like Riverside, Vine City, Pittsburgh and English Avenue.
Many sit vacant and dilapidated for months as lenders go through the process of taking them back through foreclosure and then putting them on the market.
City officials said they could not estimate how many agents have been cited. They noted the city code gives officers leeway to cite anyone from the owner to someone who has the ability to control or maintain the property.
Frequently the owners of some of the worst properties are out-of-state financial institutions, which can make it difficult to track them down or get them into city court. Real estate agents, though, are local and have their names and phone numbers right out front.
"They are certainly getting a little bit desperate," said Wayne Flanagan, another agent who has been cited and even threatened with arrest. "One [code enforcement] agent told me, 'We don't know how to get hold of out-of-state asset managers. We know how to get hold of you.' The only reason they are fining us is because we are available."
City officials say that's not true.
"I want to make clear we are not out there citing just listing agents," said Tenee Hawkins, spokeswoman for the code enforcement department. "It is our understanding they are the agents for the owner. They have some agreement to maintain the properties. We didn't just go after the agents because we can't find anyone else."
Hawkins said the department is doing its best to ensure someone cleans up and secures some of the worst properties in the city. She noted there are hundreds of homes and other buildings in distress in various neighborhoods and lots of pressure on the department for action.
"The city is desperate for all of us to take whatever steps we need to resolve this," Hawkins said.
Citations like the ones issued to Hale, Flanagan and others may come down to the language in their listing agreements.
Some contracts to sell for out-of-state lenders can obligate an agent to some duties of keeping the property clean and secured even if that may be nearly impossible. A standard listing agreement doesn't have that language, agents said.
Code enforcement officers can't know which contracts do without first citing agents and taking them to court.
That might make some rethink even trying to sell foreclosure properties.
"What I am mystified by is in some of these areas is why code enforcement is there and not Atlanta police," said Gary Tice, another agent who has been cited. "This is not a code enforcement problem."
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