In Alameda, a property is required to be registered with the City upon the occurrence of either (a) the boarding up of the building by the voluntary action of the owner or as a result of enforcement actions of the City or (b) when the property is vacant for more than 90 days for any reason and the owners do not intend to return.  The registration fee for vacant or boarded property in the City of Alameda (called a “monitoring” fee) is in excess of $600 per year and is imposed upon the owner of the property who is required to complete the registration.  The fee is, according to the municipal code, to cover the costs to the city for monitoring the property.  If the fee is not timely paid, the registration fee can become a special assessment against the property and collected in the same manner as real property taxes.  From a reading of the ordinance, it appears that this special assessment will be treated as a super-priority real property tax and prime any deeds of trust on the property.  Additionally, there may also be imposed an administrative penalty of up to $5,000 that will also be part of the special assessment.  Of course, this means that although the liability is the primary obligation of the property owner, the lender may nevertheless have to pay the registration fee and fines in the event the lender takes the property back either through foreclosure or some other loss mitigation vehicle.

One of our clients failed to recognize that there were problems with one of the properties on which they had made a loan.  The property became vacant (not surprisingly the borrower stopped paying the loan), there were numerous code violations, and those violations turned into fines which were assessed against the property.  $30,000 of fines.  All of which had to be paid by the lender in order to avoid further penalties and interest.