Originally posted by @Ned Carey:
I seriously doubt the code enforcement lien is in second position. It is a municipal lien which in most areas puts it in front of the bank.
You haven't said what the property is worth. What are current rents, what is a pro forma for a re-positioned building and what would the cost of renovations be.
I would offer a price that makes it a good deal now. I would then negotiate to pay a net to seller price so that I could then negotiate with the bank and the city.
My guess is the city doesn't normally actually charge $200 a day (although it may be allowed by law) The law is very likely applied unevenly. Presuming that is true I would challenge the code violation bill on the fact that it was discrimination. Someone in the building or in title must be of some protected class. I would argue that the only reason you are charging $200 a day on this building when hundreds of buildings around the city are not charge that much is because of the discrimination.
I would also be lobbying city official and elected representatives, to sway them onto my side.
Along the way I would find the "Highest and best use' of the property, then figure the value of the property based on what it could be used for. The city cannot take it without compensating the owner. If the property is valuable enough and you can prove it, this may be leverage stop encourage the city to rethink their plan. My guess is they expect to get if for nothing via the trumped up bogus code fines. Once they realize they will have to come out of pocket for the real value they may reconsider.
Actually, it all depends on how the particular municipality writes its bylaws. In this particular city and unless otherwise specified in the city's bylaws (as confirmed by this city's attorney) the lien is a lien and is subject to the order of recording.
As to the code enforcement, there are two types of code liens.
Abatement liens and administrative liens. Abatement liens are where the city actually resolves the problem out of pocket. (Ex: mow the yard, secure the building, etc.) These liens are non-negotiable as they have spent the money already.
Administrative liens are the scary ones because they can add up over time. These range from 15-250 dollars a day as long as not in compliance on average, depending on severity of the violation. (Ex: bare wood on house $15 per day, unsecured building $150 per day, refrigerator outside not on its back with doors off 200-250 per day because tipping danger with kids playing around could get stuck inside)
However with administrative liens, most can be negotiated for pennies less admin costs as long property has been brought into compliance.
Now in regard to foreclosing on a "blighted property" based on the lien or noncompliance, this does not fall into the same category as eminent domain where they have to recompense the owner for the value of the property. (See Detroit, New Orleans, Tampa, Jacksonville, where they are using the same concept to bulldoze blighted properties, they then lien them and have the right to foreclose on that lien. Normally they don't, but they could)
To your statement, I would agree with you that code enforcement does not have near enough oversight over it. There most definitely is discrimination, (not always racial or socioeconomic) just as simple personal dislikes at times, or yes an anterior motive like this one. I know of a lawsuit right now in the city of Tampa regarding a well warrented lawsuit regarding discrimination.
The seller is elderly, which Florida does take very seriously, so there may be some protection for her based on her age.
I like your thinking.
