Understanding Land Banks
March 8, 2019 |
Another consequence of the mortgage loan crisis was the incursion of vacant, abandoned and unsafe properties. These blighted properties adversely impact communities and neighborhoods. The property values of nearby properties are negatively impacted, as a result of overrun yards, trash accumulation, vandalism, squatters, and crime. Blighted properties are also associated with health concerns, such as lead or asbestos exposure and an increase in violent crime. As a result, many communities have turned to land banks as a method to remediate blighted properties and ultimately renew neighborhoods.
A County Land Reutilization Corporation or “Land Bank” is a tax-exempt, non-profit corporation, that has the authority to acquire and holds vacant or distressed properties. The Land Bank’s goal is to return the property to useful real estate and stabilize neighborhoods. Properties can ultimately become side-yards to a neighbor, a community park, or a new home with owners paying property taxes.
A Land Bank may be organized for the following purposes:
- To facilitate the reclamation, rehabilitation, and reutilization of vacant, abandoned, tax-foreclosed or other real property
- To hold, manage, vacant, abandoned, or tax-foreclosed property pending its reclamation, rehabilitation, and reutilization
- To assist governmental entities and other non-profit or for-profit persons to assemble and clear title
- To promote economic and housing development in the county or region
See R.C. 1724.01
A Land Bank typically acquires property though delinquent property tax foreclosure, which at conclusion permits the direct transfer of the property to Land Bank ownership. The property can also be transferred by an auditor’s deed, from private individuals, from lending institutions, estates and by private donation. Because the Land Bank itself cannot clear title, clear title has to be assured for any property obtained through a non-foreclosure process.
Once the Land Bank obtains the property, it will be evaluated to determine whether it can be rehabbed or must be demolished. Funds for renovation come from various public and private sources. Land Banks can also formulate programs to attract buyers, such as selling at a lower price in exchange for a commitment to use the property as a residence for a specified period of time. However, until a buyer is found, the Land Bank is responsible for maintaining the property from further damage or blight.
The Land Bank may be a good resource for locating investment properties for flippers or landlords. If you are interested, Land Bank properties can be found at Columbus and Franklin County Land Bank and Ohio Land Bank List.