Takings Bill Panned by Associations, Citizens

March 29, 2012

Investigative Reports

Print Friendly, PDF & Email

Property RightsCitizens and statewide associations alike voiced concern Wednesday during a Senate Judiciary subcommittee hearing over proposed legislation that would enable municipalities to not only seize and sell properties deemed unsafe, but also unoccupied homes, even if they are structurally sound.

S. 1117, the Rehabilitation of Abandoned and Dilapidated Buildings Act, caught the attention of the South Carolina Bankers Association, the Mortgage Bankers Association of the Carolinas, the South Carolina Association of Realtors, and the Municipal Association of South Carolina.

In addition, Lexington County citizens Sharon Clark and John Turner both spoke against the bill, as well.

“We’re not here today to decide whether we’re for or against dilapidated buildings; we’re here today to decide if we’re for or against the Bill of Rights,” Turner said.

Ultimately, the bill was carried over.

Under S. 1117 and a companion bill in the House, property could be seized by the government and given to someone else to repair or demolish, at the expense of the original owner.

Under the proposed legislation, a court-appointed receiver would take control of the property. The receiver could refurbish it, then either charge the original owner for the repairs, or rent it or sell it if the original owner couldn’t come up with the money.

The receiver would garner a fee of up to 10 percent of the costs associated with property rehabilitation.

If proceeds from rental fees didn’t cover rehabilitation costs, the receiver could maintain control of the property until all costs plus any receivership fees were recovered, or until a court orders the property sold to satisfy the debt.

Owners unable to pay for rehabilitation stand a good chance of losing property outright under the bill.

That’s because the proposed legislation states that if the total rehabilitation costs incurred by the receiver, plus receivership fees, exceeds the income produced during receivership, the receiver may maintain control of a property until all costs plus receivership fees have been recovered or until receivership is ended.

In addition, a court may order the sale of a property if the owner fails to repay receivers’ outstanding costs and expenses plus receivership fees after notice has been given to the owner.

A representative of the Bankers Association expressed concern that the bill was too heavy handed.

“Any legislation should take into consideration landowners’ and lienholders’ rights first,” Bankers Association Senior Vice President Neil Rashley said.

The S.C. Association of Realtors and the Mortgage Bankers Association had problems with definitions in the proposed legislation and a “lack of clarity,” representatives from both organizations told the subcommittee.

The bill, sponsored by Sen. Brad Hutto, D-Orangeburg, would allow a court-appointed receiver to take possession of property; manage it; and make repairs and improvements necessary to bring it into compliance with local codes, ordinances and state laws.

Receivers would be able to demolish structures if they establish it’s not economically feasible to bring structures up to code; or if the buildings are unfit for human habitation, deemed a public hazard, or are unoccupied by owners or lessees, regardless of structural condition.

Buildings can also be sold or demolished if it’s established that they are unsecured from unauthorized entry by vagrants or children, regardless of their condition.

The bill is bad news, according to Lexington County resident Sharon Clark.

“It appears to me that this bill would deny the citizens of South Carolina the right to due process,” she said.

Reach Dietrich at (803) 779-5022 ext. 110, or kevin@thenerve.org.