Tougher Rules to Buy Vacant Homes in Saint Paul

Last week on Wednesday, the St. Paul City Council unanimously approved the last of several reforms aimed at preventing vacant homes from languishing.  After months of negotiations and many compromises, real estate leaders are on board with the plan, too.

Council Member Dan Bostrom, says "We're trying to save our neighborhoods here." He first proposed the reforms in January when the city's list of registered vacant buildings had topped 1,600. As of the time of this post, the number of vacant buildings in Saint Paul was 1,973.  1291 of these are single-family residential dwellings.

Many of the homes are unoccupied after lenders foreclosed on the homeowners. Out-of-state lenders don't tend to them. As a result, these vacant homes become targets for gangs, drug dealers, thieves, even arsonists.

In an effort to encourage owners of vacant houses to sell their properties, the City Council recently hiked the annual fee for owning an empty house from $250 to $1,000. And now, in an effort to force repairs, the sale of many of these types of Saint Paul real estate is restricted.

The reason for the changes stems from too many inexperienced, underfinanced or underqualified people purchasing vacant homes with the idea of making a quick flip.

Previously, anyone could sell a vacant home to anyone. Deficiencies in the home were disclosed, but it often wasn't until new owners tried to rent it out or move in that they fully understood how much work needed to be done before the city would grant an occupancy or fire safety permit. A portion of the reform measures will force the shabbiest vacant buildings to be brought up to safety codes before they can be sold. It also forces buyers of the next tier of vacant homes to prove they can fix them up before the sale can close.

There are now three levels of vacant homes in St. Paul. In general, they are:

  • Tier 1: Homes with no problems that are essentially turnkey
  • Tier 2: Homes with problems that can be fixed by experienced do-it-yourselfers or contractors for a few thousand dollars
  • Tier 3, which often require tens of thousands of dollars and the skills of licensed contractors

The fixes aren't needed to bring houses up to today's new construction building codes but to address safety issues.

More than half the vacant homes within Saint Paul are Tier 2. To sell such a home, outstanding problems are identified by city inspectors. The home can be sold before the problems are fixed but only if the buyer has the cash or a reliable financing plan for the cost of the improvements.

There are as many as 353 Tier 3 homes in the city. Those can't be sold until they're brought up to safety codes.

Patrick Ruble, government affairs director for the St. Paul Area Association of Realtors, had this to say: "I don't see these restrictions hurting home sales now. The homes are still great opportunities for investors, and the sale and rehabilitation of these homes can spur development throughout a neighborhood."

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