House Study Bill 172 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON KAUFMANN) A BILL FOR An Act relating to abandoned structures and abatement of public 1 nuisances. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1206YC (1) 88 ko/jh
H.F. _____ Section 1. Section 631.1, Code 2019, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 10. The district court sitting in small 3 claims has concurrent jurisdiction for administrative warrant 4 applications pursuant to section 657A.1A, subsection 2. 5 Sec. 2. Section 655A.6, Code 2019, is amended to read as 6 follows: 7 655A.6 Rejection of notice. 8 1. If either the mortgagor, or successor in interest of 9 record including a contract purchaser, within thirty days of 10 service of the notice pursuant to section 655A.3 , files with 11 the recorder of the county where the mortgaged property is 12 located, a rejection of the notice reasonably identifying 13 the notice which is rejected together with proofs of service 14 required under section 655A.4 that the rejection has been 15 served on the mortgagee, the notice served upon the mortgagor 16 pursuant to section 655A.3 is of no force or effect. 17 2. Rejection of notice pursuant to subsection 1 shall not be 18 available to a mortgagor, or successor in interest of record 19 including a contract purchaser, of a mortgaged property that a 20 court of competent jurisdiction determined has been abandoned 21 pursuant to section 657A.2, on or after the date as determined 22 in section 657A.2, subsection 5. 23 Sec. 3. Section 657A.1, subsections 1 and 3, Code 2019, are 24 amended to read as follows: 25 1. “Abandoned” or “abandonment” means that a building has 26 remained is vacant and has been in violation of the housing 27 code or building code of the city in which the property is 28 located or the housing code or building code applicable in the 29 county in which the property is located if outside the limits 30 of a city for a period of six consecutive months . 31 3. “Building” means a building or structure , including a 32 mobile or manufactured home which has been converted to real 33 estate pursuant to section 435.26, located in a city or outside 34 the limits of a city in a county, which is used or intended 35 -1- LSB 1206YC (1) 88 ko/jh 1/ 12
H.F. _____ to be used for commercial or industrial purposes or which 1 is used or intended to be used for residential purposes and 2 includes a building or structure in which some floors may be 3 used for retail stores, shops, salesrooms, markets, or similar 4 commercial uses, or for offices, banks, civic administration 5 activities, professional services, or similar business or civic 6 uses, and other floors are used, designed, or intended to be 7 used for residential purposes. 8 Sec. 4. Section 657A.1, Code 2019, is amended by adding the 9 following new subsection: 10 NEW SUBSECTION . 8. “Responsible building official” or 11 “official” means the person appointed by the city or, if the 12 building is outside the limits of a city, the county, to 13 enforce its building codes and regulations in general or to 14 enforce this chapter in particular. 15 Sec. 5. NEW SECTION . 657A.1A Preliminary inspection of 16 building. 17 1. No sooner than one hundred thirty-five days after a 18 property has become vacant, a person, other than a governmental 19 entity, may request that the responsible building official 20 inspect the property and certify that a property is both 21 abandoned and in need of abatement. The responsible building 22 official may also initiate an inspection on the official’s own 23 initiative. 24 2. If the responsible building official finds from an 25 exterior view of the property, in addition to any other 26 credible information that the official may have, that there 27 is reasonable cause to believe that the property is abandoned 28 and in need of abatement, the official shall schedule a date 29 and time for an inspection of the property by the official. 30 The person requesting the inspection shall provide written 31 notice of the scheduled inspection by first class mail and 32 certified mail to the owner and all interested persons at 33 least twenty days before the inspection. The notice must 34 state the date, time, and place of the inspection and state 35 -2- LSB 1206YC (1) 88 ko/jh 2/ 12
H.F. _____ that unless the owner appears at the inspection to allow the 1 responsible building official access to the interior of the 2 property, the official, accompanied by the person serving 3 notice and any interested persons appearing for the inspection, 4 may enter the property to determine whether the property is 5 abandoned and in need of abatement and, if so, to estimate 6 the costs of abatement. The official may enter the property 7 for an inspection, along with the person serving notice and 8 any interested persons, if the owner is not present for the 9 inspection. Upon request, the inspection may be rescheduled 10 as needed. The responsible building official may make an 11 application for an administrative warrant pursuant to section 12 808.14 if necessary to conduct an inspection pursuant to this 13 section. 14 3. The responsible building official’s findings shall 15 be in writing with copies provided to the person requesting 16 the inspection, the owner, and all interested parties. The 17 governmental entity employing the responsible building official 18 may establish and charge a fee to cover the reasonable costs 19 of the inspection, which shall be added to costs in an action 20 under this chapter. 21 4. Evidence that financial obligations in respect to a 22 building, including but not limited to payments of a mortgage, 23 bills, or property taxes, are currently met does not rebut a 24 finding of abandonment if the property is substantially in need 25 of abatement in an action filed under section 657A.2. 26 Sec. 6. Section 657A.2, Code 2019, is amended by striking 27 the section and inserting in lieu thereof the following: 28 657A.2 Petition. 29 1. No sooner than the latter of thirty days after provision 30 of the responsible building official’s findings under section 31 657A.1A and six months after a building has become abandoned, 32 a petition for abatement under this chapter may be filed in 33 the district court of the county in which the property is 34 located by the city in which the property is located, by the 35 -3- LSB 1206YC (1) 88 ko/jh 3/ 12
H.F. _____ county if the property is located outside the limits of a city, 1 by a neighboring landowner, or by a duly organized nonprofit 2 corporation which has as one of its goals the improvement of 3 housing conditions in the county or city in which the property 4 in question is located. The petition shall not demand a 5 personal judgment against any party, but shall concern only 6 the interests in the property. A petition for abatement filed 7 under this chapter shall include the legal description of 8 the real property upon which the public nuisance is located 9 unless the public nuisance is not situated on or confined to 10 a parcel of real property, or is portable or capable of being 11 removed from the real property. Service shall be made on all 12 interested persons by personal service or by both certified 13 mail and first class mail, or if service cannot be made by 14 either method, by posting the notice in a conspicuous place on 15 the building and by publication. Service may also be made as 16 provided in section 654.4A. 17 2. If entering judgment, the court shall determine any 18 issues at law, including issues relating to title, raised by 19 the plaintiff or by a party in interest who has filed a motion 20 or answer. 21 3. In any evidentiary hearing or motion in a proceeding 22 under this chapter, the written findings of the responsible 23 building official relating to the condition of the building and 24 other matters within the scope of this chapter, if provided 25 at least ten days before the hearing to all persons not in 26 default, shall be accepted as evidence without prejudice to the 27 right of any party to require the personal testimony of the 28 responsible building official at the hearing. 29 4. If the court finds at a hearing pursuant to this section 30 that the building is abandoned or is a public nuisance, the 31 court may issue an injunction requiring the owner to correct 32 any conditions that make such building a public nuisance, or 33 issue another order that the court deems appropriate to address 34 the public nuisance. 35 -4- LSB 1206YC (1) 88 ko/jh 4/ 12
H.F. _____ 5. If the court finds at a hearing pursuant to this 1 section that the building is abandoned, unless the court 2 order establishes otherwise, the property shall be deemed 3 continuously abandoned from the date the action is indexed 4 pursuant to section 617.10, subsection 1. 5 6. A property shall not be claimed as homestead pursuant to 6 chapter 561 on or after the date determined in subsection 5. 7 7. In a proceeding under this chapter, if the court 8 determines the building is not abandoned or is not a public 9 nuisance, the court shall dismiss the petition and may require 10 the petitioner to pay an interested party’s reasonable attorney 11 fees, unless the interested party received proper notice and 12 did not appear for an inspection pursuant to section 657A.1A. 13 Sec. 7. Section 657A.3, Code 2019, is amended to read as 14 follows: 15 657A.3 Interested persons —— opportunity to abate public 16 nuisance. 17 1. Before appointing a receiver to perform work or to 18 furnish material to abate a public nuisance under this chapter , 19 the court shall conduct a hearing at which the court shall 20 offer mortgagees of record, lienholders of record, or other 21 known interested persons in the order of priority of interest 22 in title, the opportunity to undertake the work and to furnish 23 the materials necessary to abate the public nuisance. The 24 establish a date before which interested persons may file with 25 the court shall require the person selected to demonstrate 26 the written proof of intent and ability to promptly undertake 27 promptly the work required and to post security for the 28 performance of the work. If no such written proof is filed 29 by that date, the court may appoint a receiver pursuant to 30 subsection 3. 31 2. All amounts expended by the person toward abating the 32 public nuisance are a lien on the property if the expenditures 33 were are approved in advance by the a judge and if the person 34 desires the lien. The Unless an interested person has a 35 -5- LSB 1206YC (1) 88 ko/jh 5/ 12
H.F. _____ contract with the owner providing for a different interest 1 rate, the lien shall bear interest at the rate provided for 2 judgments pursuant to section 535.3 , and shall be payable upon 3 terms approved by the judge. If a certified copy of the a 4 court order that approved approving the expenses and the terms 5 of payment for the lien, and a description of the property 6 in question , are filed for of record within thirty days of 7 the date of issuance of the order in the office of the county 8 recorder of the county in which the property is located, the 9 lien has the same priority as the mortgage of a receiver as 10 provided in section 657A.7 . 11 2. 3. If the court determines by the date established 12 in subsection 1 or at the a hearing conducted pursuant 13 to subsection 1 , on the sufficiency of a timely filed 14 rehabilitation plan that no interested person can undertake the 15 work and furnish the materials required to abate the public 16 nuisance, or if the court determines at any time after the 17 hearing that an interested person who is undertaking corrective 18 work pursuant to this section cannot or will not proceed, or 19 has not proceeded with due diligence, the court may appoint a 20 receiver to take possession and control of the property. The 21 receiver shall be appointed in the manner provided in section 22 657A.4 . 23 4. If the building is a historic building or is located in 24 a designated historic district, the court shall give preference 25 to an economically feasible rehabilitation plan that preserves 26 the historical nature of the building. 27 5. Unless a receiver’s mortgage provides for periodic 28 payments, a notice, in lieu of the notice pursuant to section 29 654.2D, shall also be served by ordinary or electronic mail 30 informing all interested persons of the date certain for the 31 maturity of the mortgage note, or the event triggering maturity 32 of the mortgage note, and that on maturity the receiver’s 33 mortgage loan will be payable in full and the mortgagee may 34 then commence foreclosure without further notice. A notice 35 -6- LSB 1206YC (1) 88 ko/jh 6/ 12
H.F. _____ pursuant to section 654.4B shall also be served by ordinary or 1 electronic mail on the owner of record of the property. The 2 mortgagee shall not commence foreclosure of the mortgage until 3 sixty calendar days have passed since the date of service of a 4 notice under this subsection. 5 Sec. 8. Section 657A.4, Code 2019, is amended to read as 6 follows: 7 657A.4 Appointment of receiver. 8 After conducting If after expiration of a date established 9 pursuant to section 657A.3, subsection 1, or a hearing 10 pursuant to section 657A.3 , the court may appoint a receiver 11 to take possession and control of the property in question. 12 A person shall not be appointed as a receiver unless the 13 person has first provided the court with a viable financial 14 and construction plan for the rehabilitation of the property 15 in question and has demonstrated the capacity and expertise 16 to perform the required work in a satisfactory manner. The 17 appointed receiver may be a financial institution that 18 possesses an interest of record in the property, a nonprofit 19 corporation that is duly organized and exists for the primary 20 purpose of improving housing conditions in the county or city 21 in which the property in question is located, or any person 22 deemed qualified by the court. No part of the net earnings of a 23 nonprofit corporation serving as a receiver under this section 24 shall benefit a private shareholder or individual. Membership 25 on the board of trustees of a nonprofit corporation does not 26 constitute the holding of a public office or employment and is 27 not an interest, either direct or indirect, in a contract or 28 expenditure of money by a city or county. No member of a board 29 of trustees of a nonprofit corporation appointed as receiver 30 is disqualified from holding public office or employment, nor 31 is a member required to forfeit public office or employment by 32 reason of the membership on the board of trustees. 33 Sec. 9. Section 657A.6, unnumbered paragraph 1, Code 2019, 34 is amended to read as follows: 35 -7- LSB 1206YC (1) 88 ko/jh 7/ 12
H.F. _____ Before proceeding with the receiver’s duties, a receiver 1 appointed by the court shall post a bond in an amount 2 designated by the court. A receiver shall be immune from 3 liability for any act or omission arising from a good faith 4 effort to comply with court-ordered duties pursuant to 5 this section. The court may empower the receiver to do the 6 following: 7 Sec. 10. Section 657A.6, subsection 9, Code 2019, is amended 8 to read as follows: 9 9. Issue notes and secure the notes by mortgages bearing 10 interest at the rate provided for judgments pursuant to 11 section 535.3 , and any terms and conditions as approved by 12 the court. The court may provide for a higher interest rate 13 if the receiver has established to the satisfaction of the 14 court that the receiver has sought financing from individuals 15 and institutions willing to lend money for rehabilitation 16 of property and that the terms proposed by the receiver are 17 reasonable. When transferred by the receiver in return for 18 valuable consideration in including money, material, labor, 19 or services, the notes issued by the receiver are freely 20 transferable. If the receiver has notice that the mortgagee 21 of the receiver’s mortgage is contemplating a transfer of the 22 mortgage, the receiver shall disclose such to the court in the 23 application for approval of the mortgage. 24 Sec. 11. Section 657A.7, subsection 1, Code 2019, is amended 25 to read as follows: 26 1. If the receiver’s mortgage is filed for of record in 27 the office of the county recorder of the county in which the 28 property is located within sixty days of the issuance of a 29 secured note, the receiver’s mortgage is a first lien upon the 30 property and is superior to claims of the receiver and to all 31 prior or subsequent liens and encumbrances except taxes and 32 assessments , including taxes and assessments advanced by any 33 mortgagee in the twelve-month period immediately preceding the 34 date a petition is filed pursuant to section 657A.2 . Priority 35 -8- LSB 1206YC (1) 88 ko/jh 8/ 12
H.F. _____ among the receiver’s mortgages is determined by the order in 1 which the mortgages are recorded. 2 Sec. 12. Section 657A.7, Code 2019, is amended by adding the 3 following new subsection: 4 NEW SUBSECTION . 3. If a mortgagee of the receiver’s 5 mortgage begins foreclosure procedures pursuant to chapter 655A 6 and an interested party desires to pay off the mortgage loan, 7 the interested party shall also pay the mortgagee’s reasonable 8 costs and attorney fees. 9 Sec. 13. Section 657A.8, Code 2019, is amended to read as 10 follows: 11 657A.8 Assessment of costs. 12 The court may assess the costs and expenses set out in 13 section 657A.6, subsection 2 , and may approve receiver’s fees 14 to the extent that the fees are not covered by the income 15 from the property. The receiver shall pay the costs and 16 reasonable attorney fees of a plaintiff who requested an 17 inspection pursuant to 657A.1A unless an interested party 18 not in default who appeared for the inspection objects to 19 the fees and costs in whole or in part. The court shall 20 determine the merits of such objection. If the court finds 21 that a neighboring landowner has pursued an action pursuant to 22 this chapter in bad faith, the court may assess attorney fees 23 against the neighboring landowner and may bar such neighboring 24 landowner from filing future actions under this chapter. If a 25 foreclosure of the receiver’s mortgage pursuant to chapter 655A 26 is contemplated, the court may retain jurisdiction to determine 27 the amount of attorney fees payable under 657A.7, subsection 3. 28 Sec. 14. Section 657A.10A, subsection 1, paragraph a, Code 29 2019, is amended to read as follows: 30 a. In lieu of the procedures in sections 657A.2 657A.1A 31 through 657A.10 and 657A.10B , a city in which an abandoned 32 building is located may petition the court to enter judgment 33 awarding title to the abandoned property to the city. A 34 petition filed under this section shall include the legal 35 -9- LSB 1206YC (1) 88 ko/jh 9/ 12
H.F. _____ description of the abandoned property. If more than one 1 abandoned building is located on a parcel of real estate, the 2 city may combine the actions into one petition. The owner of 3 the building and grounds, mortgagees of record, lienholders 4 of record, or other known persons who hold an interest in the 5 property shall be named as respondents on the petition. 6 Sec. 15. NEW SECTION . 657A.10B Applicability. 7 The provisions of sections 657A.1A through 657A.10 shall 8 only apply to cities and counties that have, by ordinance, 9 provided that the provisions shall apply. 10 Sec. 16. CODE EDITOR DIRECTIVE. 11 1. The Code editor is directed to renumber section 657A.10B, 12 as enacted in this Act, as section 657A.10A, and to renumber 13 section 657A.10A as section 657A.10B. 14 2. The Code editor shall correct internal references in the 15 Code and in any enacted legislation as necessary due to the 16 enactment of this section. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 This bill changes certain procedures relating to abandoned 21 structures and abatement. 22 The current definition of “abandoned” or “abandonment” 23 requires a property to have been in violation of a housing or 24 building code for at least six months. The bill removes the 25 time element from the definition and states that evidence of 26 financial obligations in respect to the building does not rebut 27 a finding of abandonment if the property is substantially in 28 need of abatement. The bill requires a property to remain 29 vacant for 135 days before a person may request a responsible 30 building official to inspect a building to determine whether 31 it is abandoned and in need of abatement. Responsible 32 building official is defined in the bill. The bill allows the 33 responsible building inspector to make an application to the 34 court for an administrative warrant if necessary to conduct an 35 -10- LSB 1206YC (1) 88 ko/jh 10/ 12
H.F. _____ inspection of a building. 1 The term “building” currently includes buildings and 2 structures only. The bill adds mobile and manufactured homes 3 that have become real property pursuant to Code section 435.26. 4 Current law relies on the current definition of “abandoned” 5 to start the clock for when a person may file a petition 6 for abatement. A hearing is required to determine if the 7 building is abandoned or is a public nuisance. Currently, a 8 petitioner must make service on the building owner in one of 9 three methods. The bill requires a property to remain vacant 10 for at least 135 days before a person may file a petition for 11 abatement. The bill does not allow for a personal judgment 12 against any party and requires the petition to be solely 13 against the interested persons’ interest in the property. The 14 bill includes additional methods of service. The bill allows a 15 responsible building official’s written inspection report to be 16 accepted as evidence in an evidentiary hearing or motion in a 17 proceeding under Code chapter 657A under certain circumstances. 18 The bill provides that if a court finds that a building is 19 abandoned, unless the court order establishes otherwise, the 20 property is deemed continuously abandoned from the date the 21 action is indexed pursuant to Code section 617.10. A property 22 cannot be claimed as homestead, and a mortgagor, or successor 23 in interest of record, cannot reject a nonjudicial foreclosure 24 written notice served on the mortgagor, or successor in 25 interest, after such date. 26 Current law allows an owner to collect reasonable attorney 27 fees actually incurred from a petitioner if the court finds 28 that the building in question is not abandoned or a public 29 nuisance. The bill allows the court to require the petitioner 30 to pay an interested party’s reasonable attorney fees unless 31 the interested party was properly noticed and did not appear 32 for an inspection pursuant to Code section 657A.1A. 33 Current law requires the court to conduct a hearing to offer 34 mortgagees of record, lienholders of record, or other known 35 -11- LSB 1206YC (1) 88 ko/jh 11/ 12
H.F. _____ interested persons the opportunity to abate a public nuisance. 1 The bill eliminates such hearing and creates a new process for 2 interested persons to demonstrate their intent and ability to 3 abate the nuisance and act as a receiver. If the building 4 is a historic building or located in a historic district, 5 the court shall give preference to an economically feasible 6 rehabilitation plan that preserves the historical nature of the 7 building. 8 Current law allows a court to empower a receiver to issue 9 notes and secure the notes by mortgage bearing interest at 10 the statutory rate and any terms and conditions approved by 11 the court. The bill allows the court to provide for a higher 12 interest rate. If the receiver contemplates a transfer of the 13 note and mortgage, at the time that the receiver seeks court 14 authorization of the contemplated transfer, the receiver must 15 disclose to the mortgagee the contemplated transfer in the 16 receiver’s application for approval of the mortgage. The bill 17 provides immunity from liability for a receiver acting in good 18 faith to fulfill the receiver’s court-appointed duties. 19 The bill makes an interested party responsible for paying 20 the mortgagee’s reasonable costs and attorney fees if the 21 interested party pays off the receiver’s mortgage loan. 22 The bill requires a receiver to pay a plaintiff’s reasonable 23 attorney fees in most situations, but provides that a 24 neighboring landowner who pursued an action in bad faith may 25 be liable for attorney fees. The court may bar such landowner 26 from filing further actions under Code chapter 657A. 27 The bill provides that Code sections 657A.1A through 657A.10 28 shall only apply to cities and counties that adopt such by 29 ordinance. 30 The bill directs the Code editor to renumber new Code section 31 657A.10B as new Code section 657A.10A, and to renumber current 32 Code section 657A.10A as new Code section 657A.10B, and to 33 correct internal Code references as necessary. 34 -12- LSB 1206YC (1) 88 ko/jh 12/ 12