3 Positive Pieces of News in the Real Estate Legislative Field…

When are we just going to admit that EVERY TIME the government gets involved in the housing, it distorts the market and makes it harder for Americans to get the housing they want? 

Go ahead, deny it: talk about how FHA and Section 8 are actually good for housing. Then look at the reality: FHA allows people who don’t have enough money to maintain a home to buy a home, costing taxpayers hundreds of millions of dollars every time the market turns south. Section 8 artificially raises rents in our lowest income communities, and makes it impossible for the working poor who aren’t getting government help to afford a place to live.  

From public housing to encouraging home ownership to trampling on the constitutional rights of property owners through licensing, registration, and ridiculous fines for minor infractions like litter and high grass, every attempt the government makes to make things ‘better’ ends up making them worse. 

It’s hard for real estate investors and property owners to fight the tsunami of new ordinances, regulations, and laws that come at us every year, but every so often, someone manages to push back on some of the encroachments our industry faces every day. Here are some examples that give me hope: 

Federal Court Finds Pre-Sale Inspections Unconstitutional. Many cities throughout the U.S. have “Pre-Sale” or “Point of Sale” inspections that require property owners to pay to have their homes inspected BY THE CITY before they can sell. Yes, even if they’re selling as-is. Yes, even if the buyer WANTS to take on the property in less-than-ideal condition. 

1851 Center for Constitutional Law, with funding from the Ohio Real Estate Investors Association, took the city of Oakwood, Ohio to Federal Court over this issue. The judge in the Southern District of Ohio ruled that the pre-sale inspection was unconstitutional under the 4th amendment, because it requires a search by a government official without a warrant.  

This doesn’t mean that all other cities will automatically withdraw their pre-sale inspection laws, but if you own properties in an area that has this requirement, you might want to make your officials aware that the court is requiring Oakwood to pay back all of the fees they’ve collected for the last 6 years. 

Dodd-Frank for Seller-Financing may be ended. When the Dodd-Frank reform act passed, many real estate investors were surprised to find that they could no longer decide for themselves who to sell their properties to, nor put very-common balloons into seller-financed loans to homeowners. 

The Seller Finance Coalition has successfully gotten a bill written and sponsored that aims to remove most kinds of seller-financed deals from the umbrella of Dodd-Frank. More on this on tonight’s show, and as events develop. 

Fighting Back Against Occupancy Limits. Few landlords would choose to over-crowd a rental property, but many cities have laws that limit the number of unrelated individuals in ANY property to just 3. These laws are typically meant to reduce student housing and to keep landlords from housing unpopular groups like recovering drug addicts,  ex-felons, and other “NIMBY” populations. 

1851 Center for Constitutional Law recently filed a motion for preliminary injunction against the city of Bowling Green Ohio to end both the ordinance and the city’s $500 PER DAY fine for violation of the law. According to attorney Maurice Thompson, the law is an unwarranted restriction of private property rights meant primarily to inflict government-backed social engineering on the city, and the $162,000 a year fine is excessive. 

I can’t state strongly enough how important it is for all real estate entrepreneurs to take up the fight against this kind of government over-reaching both in the legislature and in the courts. Your own government is your worst enemy and biggest expense when it comes to your business.