Not only are property values decreasing, but so is the success of the once lobbying giant…the National Association of Realtors.
Recent attempts, joined with the NHBA, to stop the U.S. Congress from passing a national building code or standard for energy efficiency just failed.
Challenge to Ordinance Rejected
A federal court has considered the constitutionality of a city’s ordinance requiring inspections prior to closing.
Calumet City, Illinois (“City”) enacted an ordinance which: first, required a “point of sale” inspection without the owner’s consent and prevented the transfer of the property until a certificate of compliance was issued; and second, prevented sales of multi-family housing unless the owners performed a “deconversion” to reduce the number of dwelling units to the amount that was permitted under current law. In a previously summarized decision, the Mainstreet Association of REALTORS®
(“Association”) had challenged the ordinance, but the court had ruled the association lacked standing to file such a challenge- click here <http://www.realtor.org/letterlw.nsf/pages/1007mainstreet2> to read a summary.
Alonzo Smiley (“Owner”) owned a property in the City. At the time of purchase, the property had three units, which he deconverted and rented only two of the units. He now desired to return the property to three units and sell it, but the ordinance would require a property inspection prior to sale. The Owner filed a lawsuit challenging the constitutionality of the ordinance. He also sought to have his lawsuit certified as a class action. The trial court considered these arguments.
The United States District Court for the Northern District of Illinois certified the lawsuit as a class action but rejected the Owner’s constitutional challenges to the ordinance. There are four requirements for determining whether class certification is appropriate: numerosity, commonality, typicality, and adequate representation. The essence of these requirements is to determine whether a class exists and can be defined by the court.
Since all homeowners in the City are affected equally by the ordinance and could easily be identified, the court found that the case was appropriate for class action status. The court also found that the Owner and his lawyers would adequately represent the class, and relief would serve to equally protect all members of the class. Therefore, the court certified the case as a class action lawsuit.
Next, the court considered the City’s motion to dismiss the Owner’s allegations. The Owner argued that the ordinance constituted an ureasonable restraint on his right to transfer the property. He claimed that the Ordinance violated his due process rights because it prohibited the transfer of property unless the property owner received the City’s approval. The Owner also argued that the ordinance constituted an impermissible search and seizure. The court determined that the ordinance advanced a legitimate interest of the City in protecting its housing stock and was not arbitrary, and so dismissed these allegations.
The court then considered the allegations that the ordinance violated property owners’ procedural due process rights. The Owner argued that the ordinance failed to provide hearings for those who wanted to contest the results of an inspection and contained vague standards (requiring property to be in “good repair”) for compliance. The court rejected both challenges, finding the inspection ordinance provided some procedural safeguards and that the ordinance referenced a publication containing various descriptions of what constituted a suitable property condition.
Thus, the court granted the City’s motion to dismiss and dismissed the Owner’s challenges to the Ordinance.
Finally, the court considered the Association’s motion to intervene in the lawsuit because the (1) the Association’s members had an interest in the outcome of the litigation, since their business involved selling properties in the City, and (2) to avoid any mootness problems if the Owner had to file bankruptcy. The court found that the Association’s intervention was unnecessary because the Owner currently served as an adequate representative and, if he did file a bankruptcy, the court had already certified a class of all property owners in the City and so another representative could be drawn from that class. Therefore, the court denied the motion to intervene.
Smiley v. Calumet City, No. 08C3017, 2009 WL 1381034 (N.D. Ill. May 15, 2009). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].
Editor’s Note: NAR contributed financial support to the Owner’s lawsuit, per the recommendation of NAR’s Legal Action Committee.