Introducing In Rem 2 - 25-0080 In Rem Foreclosure- Vacant Structures and Nuisance Property

According to the DHCD dashboard, there are 12,566 vacant and abandoned properties in Baltimore City, which are those marked with a Vacant Building Notice (red square on Codemap). There are also approximately 20,000 vacant lots (which are not on the dashboard yet). While there has been amazing progress - to the tune of rehabbing or demolishing a little under 1000 vacant properties a year in the last three years, we still have a very long way to go. Baltimore City government only owns 914 of these vacant properties and about ½ of the vacant lots.

Because the City only owns 7%  of the vacant properties, we need more tools to make sure we can acquire them, work with communities on the outcomes, and make them available to our partners who will utilize them.

The reduction in vacant properties is largely due to the private market - either families selling their vacant homes to wholesalers, investors obtaining vacant properties via tax sale, or other reasons. This means communities may not be able to have input on what happens with the vacant homes. In addition we have already seen at least two major scams involving Baltimore City vacant properties because of private investors. 

In 2015, as part of their commissioned study about solutions to Baltimore City’s tax sale system, the Center for Community Progress recommended the use of In Rem Judicial Foreclosure, rather than tax sale, to take hold of vacant properties. In 2019, the General Assembly passed legislation that created and authorized jurisdictions like Baltimore City to conduct In Rem Judicial Foreclosure actions (In Rem means “against a thing”). In this iteration, which I will call “In Rem 1,” the City can foreclose on a vacant and abandoned property or lot when the unpaid liens exceed the assessed value of a property, meaning the vacant property or lot has no value. The liens are then extinguished, producing clear title for the city to acquire. I’m proud to have worked with a broad coalition to get this passed in my previous role as the Executive Director for the Community Development Network of Maryland, prior to becoming a City Councilwoman. 

Shortly after that, the Baltimore City Council passed DHCD’s bill to begin conducting In Rem actions. “In Rem 1” is extremely important because we know that there are several thousand vacant properties and lots with hundreds of thousands of dollars in unpaid liens. No one was purchasing these in tax sale, and no one would approach owners to purchase these vacant properties with such high liens. They were stuck as vacant forever - owned by mostly deceased people, families who have moved away, forfeited LLCs, absent landlords, and the like. This was the case of the Stricker Street property where Lt. Butrim, Lt. Sadler, and FF/EMT Lacayo were killed. “In Rem 1” is the best tool to address these kinds of properties. As a matter of fact, using lien data from last year, 44% of the privately owned vacant properties and lots in my district are eligible for In Rem 1. In addition, once the city acquires the property through In Rem, we can control the outcome - it does not have to be auctioned to the highest bidder. For whole block outcomes, this could not be more critical.

While implementation of In Rem 1 was hampered because of the pandemic, filing of In Rem 1 cases began in ernest in early 2022, and the first cases landed in the Circuit Court in November of 2022. I want to thank the Circuit Court for their very important role here, because our In Rem cases are in a separate docket with one dedicated magistrate. The Circuit Court is one of the greatest partners in this initiative. 

In Rem is designed to be faster. Other forms of acquisition of vacant properties or lots take years. In Rem takes months. In Rem cases - from filing the case to judgement - take 90-180 days, which is meteoric speed compared to all the other methods of acquisition. 

In Rem 1 has had 2.5 years of implementation, and to date, the City has acquired over 413 vacant properties and lots, with several in my district, particularly for the whole block strategy on the 1600 Block of Gorsuch which was our test block for In Rem. Thanks to Mayor Scott and all of you, over the past two budgets we have added up to 15 more lawyers to the In Rem team. Thanks also to Chair Clippinger, Senate President Ferguson and the entire General Assembly, with a match by the Administration in this past budget, we have provided significant funds for the Circuit Court to hear more cases. Currently In Rem cases are heard every Wednesday morning, and the additional funding will allow for either more time each Wednesday, or to establish an additional day for cases in this dedicated docket. DHCD is now using In Rem as the primary mode of acquisition which is exactly how we envisioned it. The goal is to file 200 cases per month, we are currently at around 40-60 cases per month. I want to thank DHCD for their very good work and dedication to implementing In Rem.

Today, the bill before you, I will call “In Rem 2.” It expands In Rem to allow for the City to foreclose when the unpaid liens are below the value of a vacant property or lot, and liens are in arrears for more than 6 months. The City would have to pay the difference between the appraised value and the liens to the last known owner to avoid a taking and violation of the recent Tyler v Hennepin decision. The state authorization for this phase of the work came in 2023 thanks to Senator McCray and Delegate Smith who sponsored the Scott Administration bill enabling Baltimore City to conduct In Rem 2 actions. 

Currently, 28% of the privately owned vacant properties and lots in my district qualify for In Rem 2 actions. These same properties would likely go to receivership, but in receivership we have to auction the properties off to the highest bidder, which actually does not allow for community development orgs to bid because the bids these days are so high, and the winner may not have the interest of the community in mind. In Rem 2 is so much better, it will be faster, and we will be able to truly accomplish whole block outcomes using both In Rem 1 and In Rem 2.

Based on the analysis conducted by my office, we believe with the full complement of the In Rem tools, the City could acquire 65% or more of the privately owned vacant and abandoned properties and lots in our city ensuring they get to the hands of partners who will get the job done.

In my letters to the Baltimore Vacants Reinvestment Council each month, I write extensively about In Rem 1 and the impact it has. I very much look forward to writing about In Rem 2.

I want to acknowledge the challenges we still have on several of our processes to dispose of properties from the City to our partners, and we are absolutely working on that. The bottom line is that we need more tools, not less, to tackle this crisis, and I am extremely grateful to have the opportunity to work on this. Thanks to my colleagues who have signed on. I look forward to the hearing where I’ll have charts that explain what I just talked about a little better.