«JOURNAL OF LAW, ECONOMICS & POLICY VOLUME 10 SPRING 2014 NUMBER 2 EDITORIAL BOARD 2013-2014 Steve Dunn Editor-in-Chief Crystal Yi Meagan Dziura Sarah ...»
Mencken offered a blunt assessment of that option: “[G]overnment is a broker in pillage, and every election is a sort of advance auction sale of stolen goods.” And, as the Hettingas can attest, it's no good hoping the process will heal itself. Civil society, “once it grows addicted to redistribution, changes its character and comes to require the state to ‘feed its habit.’ ” The difficulty of assessing net benefits and burdens makes the idea of public choice oxymoronic. Rational basis review means property is at the mercy of the pillagers. The constitutional guarantee of liberty deserves more respect—a lot more.190 In Hettinga, a case about a regulation that forced dairy farmers who produced and distributed their own milk products to make payments to the government, Justice Brown accurately described the deterioration of property rights in her concurring opinion, which displayed her perspective in a spirited way.191 The hybrid land use regulation that is the abandoned property ordinance similarly shows the abusive application of police power authority used by local government against private property rights and the freedom of contract. Economic liberty is indeed deserving of more respect.
The rule of law becomes a false hope when an abandoned property ordinance rewrites a private contract to reverse the parties’ lawful division of rights, duties, and risks, releasing a borrower from the significant contractual obligation to maintain the property. Furthermore, a lender becomes obligated, rendering public nuisance regulations superfluous in those instances when a borrower has defaulted on his mortgage loan and abandoned his property.
189 CHULA VISTA, CAL., ORDINANCE NO. 3080, Recitals 5–6 (2007).
190 Hettinga v. United States, 677 F.3d 471, 480–81, 83 (D.C. Cir. 2012) (J., Brown, concurring) (citations omitted).
191 Id. at 480–83 (J., Brown, concurring).
2014] NATURE ABHORS A VACUUM AND SO DO LOCAL GOVERNMENTS 381 C. Are Abandoned Property Ordinances Void for Vagueness?
Code enforcement personnel view property conditions through the CVAPO prism. The CVAPO, however, establishes criteria for a lender’s conduct that is different than the relevant provisions in a loan agreement.
As a result, mortgage lenders are put in a theoretical dilemma, if not a practical one. The rule of law is diminished because an abandoned property ordinance that is vague leaves a mortgage lender in the vulnerable position of guessing when it must begin to maintain property,192 putting it at risk of a fine or criminal prosecution.193 In order to start the foreclosure process, the lender must make a good faith determination that the borrower is in default, and record a notice of default.194 Upon recordation, the lender must inspect and register the property.195 Upon inspection and the discovery of vacant property (i.e., “not legally occupied”), the lender must start to maintain the property.196 If the property is found occupied but displays “evidence of vacancy,”197 the lender must start to maintain the property regardless of the occupancy.198 These steps raise a key question: Do the phrases “not legally occupied” and “evidence of vacancy” describe a sufficiently definitive point when a lender will know with certainty that its maintenance obligations begin?
A similar question arises after the maintenance obligations have begun. By what standard will the condition of the property and its maintenance be measured? The CVAPO declares the exterior of the property “shall be [maintained] in comparison to the neighborhood standard.”199 If there is landscaping, it “shall be maintained to the neighborhood standard at the time registration was required.”200 “Neighborhood standard” is defined so that the properties within a 300-foot radius of the subject property are the determinative standard for the subject property’s condition.201 The director 192 See generally Ross v. City of Rolling Hills Estates, 192 Cal. App. 3d 370, 375 (1987).
193 CHULA VISTA, CAL., MUN. CODE § 15.60.090, 110 (2007).
194 What a lender cannot do under California foreclosure law is improperly and unfairly file a notice of default without a genuine default of the loan agreement terms. In re Worcester, 811 F.2d 1224, 1228, 1232 (9th Cir. 1987); Whitman v. Transtate Title Co., 165 Cal. App. 3d 312, 323 (1985).
195 See supra Part III.A.
197 CHULA VISTA, CAL., MUN. CODE § 15.60.020 (2013) (“Evidence of vacancy means any condition visible from the exterior that on its own or combined with other conditions present would lead a reasonable person to believe that the property is vacant.”); see also supra note 75.
198 CHULA VISTA, CAL., MUN. CODE § 15.60.040 (2013).
199 CHULA VISTA, CAL., MUN. CODE § 15.60.050 1 (2013).
200 Id. at 3.
201 CHULA VISTA, CAL., MUN. CODE § 15.60.020 (2013). “Neighborhood standard” is defined as “those conditions that are present on a simple majority of properties within a 300-foot radius of the subject property. A property that is the subject of a neighborhood standard comparison, or any other abandoned property within the 300-foot radius, shall not be counted toward the simple majority.” Id.
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of development services has the authority to require additional maintenance and security measures, but the specific measures are left to the discretion of the director and thus are prone to be created and enforced subjectively.202 The phrases “not legally occupied,” “evidence of vacancy,” and “neighborhood standard” are vague and susceptible to multiple interpretations. The director of development services can impose additional requirements, but those requirements are not set out in the CVAPO so a lender would not know beforehand what it must do to satisfactorily maintain and keep secure the property. Without the necessary clarity, the CVAPO is void for its vagueness. The discussion below explains the confusion that is created by the CVAPO.
A vague ordinance is subject to attack based on the due process clauses of state and federal constitutions. The court in Ross v. City of Rolling
Hills Estates set out the test for a due process attack:
It is well settled that “a statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law.” This principle applies not only to statutes of a penal nature but also to those prescribing a standard of conduct which is the subject of administrative regulation. The language used in such legislation “must be definite enough to provide a standard of conduct” for those whose activities are prescribed as well as a standard by which the agencies called upon to apply it can ascertain compliance therewith. Approved rules by which to judge the sufficiency of a statute in the premises have been applied in numerous decisions, i.e., the words used in the statute should be “well enough known to enable those persons within its purview to understand and correctly apply them.”203 The court went on to declare that “a standard fixed by language which is reasonably certain, judged by the foregoing rules, meets the test of due process ‘notwithstanding an element of degree in the definition as to which estimates might differ.’”204 An ordinance that preserves the features of property so as to protect its condition and value satisfies due process where its language describes the required conduct in a manner that is reasonably certain and does not require persons of common intelligence to guess at its meaning.205 In Ross, the plaintiff–landowners applied for a variance to enable them to construct a 202 See CHULA VISTA, CAL., MUN. CODE § 15.60.070 (2013) (describing some examples of maintenance and security measures that may be required and providing the director the discretion to employ any “other measures as may be reasonably required to arrest the decline of the property”).
203 Ross v. City of Rolling Hills Estates, 192 Cal. App. 3d 370, 375 (1987) (italics in original) (citations omitted); see also Friends of Davis v. City of Davis, 83 Cal. App. 4th 1004 (2000) (holding a design review ordinance that authorized the local government to approve development project’s design was valid and not vague); Briggs v. City of Rolling Hills Estates, 40 Cal. App. 4th 637, 642–43 (1995) (holding a zoning ordinance that required building designs to “respect the existing privacy of surrounding properties” was not unconstitutionally vague).
204 Ross, 192 Cal. App. 3d at 375 (citations omitted in original).
2014] NATURE ABHORS A VACUUM AND SO DO LOCAL GOVERNMENTS 383 two-story addition to their home.206 The local zoning commission denied the application pursuant to the municipality’s view protection ordinance and the city council affirmed that decision.207 Plaintiff–landowners appealed to the trial court on the ground that various terms in the ordinance were vague and thus unconstitutional.208 The trial court denied the requested writ of mandate.209 The Ross court affirmed the lower court’s judgment because the ordinance was not unconstitutionally vague.210 It reasoned that, though the view protection ordinance was not a zoning ordinance, but like one, “‘[a] substantial amount of vagueness is permitted in California zoning ordinances’ in order to permit delegation of broad discretionary power to administrative bodies.”211 The court further found there was a sufficient finding that plaintiffs’ proposed structure would adversely impact the views of neighboring properties.212 Unlike the view protection ordinance in Ross, the CVAPO is vague because the term “vacant,” defined as “not legally occupied,” requires a lender to guess at its meaning.213 This is significant because, once the notice of default is recorded, the lender’s maintenance obligations begin as soon as the property is “vacant.” Lenders and city personnel may come to different conclusions as to when a property is vacant, particularly when there is an occupant (whether the borrower or a tenant or some third party), but the occupancy is a breach of the loan agreement or a rental agreement, or in violation of federal, state or local law.
Since the CVAPO does not further define “vacant,” its definition begs the question: When does a property become not legally occupied so that the maintenance obligations begin? Without guidance from the CVAPO,214 occupancy must be evaluated for its lawfulness under federal, state, or local law, and under the loan’s deed of trust or a rental agreement. The typical 206 Id. at 373.
208 Id. at 374. Plaintiff-landowners complained that the terms “needless,” “discourage,” “view,” “impairment” and “significantly obstructed” were “unintelligible concepts.” 209 Ross v. City of Rolling Hills Estates, 192 Cal. App. 3d 370, 373 (1987).
210 Id. at 376, 379.
211 Id. at 376 (quoting Novi v. City of Pacifica, 169 Cal. App. 3d 678, 682 (1985)); see also Briggs v. City of Rolling Hills Estates, 40 Cal. App. 4th 637, 642–43 (1995) (holding that laws must be broad enough to allow substantial administrative discretion and not so rigid as to eliminate all differences of opinion).
212 Ross, 192 Cal. App. 3d at 377; see also Friends of Davis v. City of Davis, 83 Cal. App. 4th 1004, 1012 (2000) (“To be valid, zoning regulations must be expressly or impliedly based upon a finding by the governing body of the municipality that such regulations are necessary for the general welfare of the community.”).
213 CHULA VISTA, CAL., MUN. CODE § 15.60.020 (2013).
214 Courts generally will not insert what has been omitted in an ordinance. See In re Hoddinott, 12 Cal. 4th 992, 1002 (1996); Kleitman v. Superior Court, 74 Cal. App. 4th 324, 334 (1999); Herman v.
L.A. Cnty. Metro. Transp. Auth., 71 Cal. App. 4th 819, 825–26 (1999); see also CAL. CODE CIV. P.
§ 1858 (2013).
residential deed of trust or mortgage requires owner occupancy (at least for a specified period) and prohibits abandonment of the property by the owner–borrower. A lender will determine whether a borrower has breached the deed of trust’s occupancy provision,215 and then decide whether to exercise its discretion to pursue a remedy.216 During that decision-making process, a lender will certainly consider, in the context of California law, whether the borrower’s absence from the property complies with the trust deed provision,217 recognizing the borrower does not lose title until the foreclosure sale occurs.218 In any case, the general rule is that a fee simple owner cannot abandon his title.219 As it deliberates, the lender is aware that it is not in its interest to permit an extended vacancy because the property would fall into disrepair, affecting the property’s value and the ultimate recovery at a foreclosure sale.
A few examples illustrate how the lender and code enforcement personnel could arrive at opposite conclusions. Examples of when property may not be legally occupied include: (1) a borrower literally abandons the property, leaving it empty in breach of the deed of trust; (2) a borrower moves out of the property to lease it to a tenant without the consent of the 215 See California Single—Family—Fannie Mae/Freddie Mae Uniform Instrument, Form 3005 01/01, § 6 (“Occupancy. Borrower shall occupy, establish, and use the Property as Borrower’s principal residence within 60 days after the execution of this Security Instrument and shall continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld, or unless extenuating circumstances exist which are beyond Borrower’s control.”).
216 See id. at § 9.