A new study shows that owners of run-down apartment buildings are selling them to each other “in a criminal conspiracy to avoid having to do the legally required maintenance necessary to keeping their buildings habitable and safe” (BoingBoing).
A tenant advocate was working with the city to document unsafe living conditions in apartments — things like leaking sewage and lead levels that were causing mental retardation — and get the owners of the buildings to make repairs “But every time documented problems were delivered to the current LLC [Limited Liability Company] owners by city officials,” the report says, “nothing would happen.”
When the city’s deadline approached to fix the violations, the old LLC owner would explain that the property had changed hands and they were no longer involved. The buildings continued to deteriorate as owner after owner avoided addressing the violations.
In fact, the buildings were shifting hands within an extended family. Confirming the connections between the various landlords proved that “…properties exchanged hands not as independent and valid real estate investments but as a conspiracy to avoid fixing the building violations.”
So, it went something like this. The building was passing from one LLC to another:
But all the LLCs were controlled by people connected to one other:
So the family had found a way around the law, “allowing the owners to ‘strip mine’ the equity from the buildings,” while leaving tenants in dangerous conditions.
The authors of the report call this a “common slumlord modus operandi.” You should read the whole thing; it’s pretty stunning.
Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.
Comments 20
Kate Pesich — January 9, 2012
This is just sad. There's really no other way to explain it.
Beeberger — January 9, 2012
I'm sure his happens in many property owning families/circles. I'm sure it has happened in buildings I've lived in. No one wants to be held responsible for anything... especially things that will cost them money and they're not the one's experiencing the benefit of the investment. Rats/mice/vermin, dangerous contaminants, etc. Landlords are often willing to subject other families and their children to dangers that they themselves would never allow to happen to them. Exploitation comes in many many flavors.
Yannick — January 9, 2012
Would LOVE to hear the libertarian spin on this one.
Simonf42 — January 9, 2012
A solution to this could be legislation that requires property be up to code before it is sold and that repairs be made within a certain timeframe with the penalty of a fine equal to the cost of repairs plus a punitive sum if the landlord doesn't comply.
Веселин Жилов — January 10, 2012
Do you think that owners of such buildings can make enough money to be able to fix them?
Gilbert Pinfold — January 10, 2012
Which city? Sounds like Chicago.
TJ Kudalis — February 3, 2012
Fascinating! My old slumlord in Minneapolis did exactly this. After ten years of problems, front page stories on weekly newspapers and two new laws specifically written to prevent his abuses at multiple properties, they finally managed to start proceedings to remove his license in the city.
He delayed it in court for a year, then sold all the buildings to a "new" company that was a subsidiary of one of his shell companies and split off his administrative and maintenance staff as a "management company" that only provided services to his old building. Poof - license problems gone.Just amazing. The city can't keep up.
Dan — December 20, 2012
It's unfortunate that some property owners think that building
maintenance is not a priority. It could end up saving them money in the long run and extend the life of their property.