Thursday, October 26, 2017
Santa Barbara Realtors sued City Hall this week over a controversial ordinance that mandates detailed inspection reports of residential properties prior to every sale. The lawsuit — spearheaded by the Santa Barbara Association of Realtors (SBAOR) and filed by the powerful Pacific Legal Foundation law firm out of Sacramento — argues the inspections impinge on homeowners’ constitutional rights by violating the Fourth Amendment, which protects people from unlawful government searches.
SBAOR president David Kim said his organization finally deadlocked with the city after eight years of negotiations over its Zoning Information Report (ZIR) requirement. “We both came to an impasse, which led SBAOR to pursue other avenues of making the city understand the draconian nature of this ordinance,” he said. Kim and his fellow realtors argue ZIRs are not only burdensome and expensive — at $475 a pop and required no later than five days after entering a sales contract, often in the middle of escrow — but also woefully outdated. Santa Barbara, they note, is only one of 20 cities in the state to require them.
Kim pointed to a 2014-2015 Santa Barbara County Grand Jury report that examined repeated complaints over ZIRs. Originally adopted in 1974, the ordinance was designed as a “health and safety” check on the proliferation of unpermitted rental units in garages and rooms split from downtown Victorian homes. Since then, the ZIRs have evolved to include meticulous appraisals by the city’s Community Development Department (CDD) of minor building codes and zoning laws — e.g., fence lines, window placements, and so on. Violations must be remedied by the current owner, frequently at great cost, before a sale is allowed.
The intent of the ordinance is laudable, the grand jury said, but its real-world application is highly problematic. ZIRs are often inaccurate, incomplete, and inconsistent, the jury heard from multiple witnesses. Files were lost in office moves, and a large number of discrepancies occurred during the 15-year tenure of one particular employee. “Many homeowners and real estate agents provided evidence that although one ZIR is deemed clear, the next ZIR on the same property may cite violations,” the grand jury stated. This puts blameless owners on the hook for the costs to fix violations committed by a previous owner. “The CDD is unapologetic about this,” the report states, even when unfavorable ZIRs kill sales.
The grand jury concluded that while ZIRs once had an important role to play in preserving neighborhoods from overcrowding, “time has caught up with them and they no longer hold the relevance they once had.” Moreover, it stated, “The past-mistakes-must-be-corrected attitude [of the CDD] is unprofessional and unfair to the innocent people simply trying to sell their homes.” The report highlighted multiple instances of owners digging up old blueprints and aerial photos to prove their cases. “The onus should be on the city to prove that a violation exists, and not on the seller to prove that one does not exist.” It also described nightmare scenarios of would-be sellers being forced to pay tens of thousands of dollars to rebuild decks or move outbuildings.
Kim elaborated that the state’s robust Real Estate Transfer Disclosure Statement law renders ZIRs moot, and he said the lawsuit is not meant to do away with home inspections altogether during the buying/selling process. “This case is limited to an invasive and expensive inspection requirement by the city that is unrelated to any health or safety issues and is performed by government inspectors with no specialized knowledge,” he said. (On its website, the city states that a ZIR inspector is “neither a building inspector nor a licensed surveyor.”) “We want to emphasize that we encourage buyers and sellers to obtain independent inspections on the property as part of their due diligence.”
Meriem Hubbard, the Realtors’ attorney, said the Pacific Legal Foundation previously put pressure on City Hall to suspend ZIRs. As a concession, the city now allows homeowners to opt out of new inspections. But, said Hubbard, the final ZIRs then include a large disclaimer from staff that the city cannot confirm any violations exist due to limited access to the site. “This is very coercive,” she said. If true health and safety concerns exist, Hubbard concluded, “They can get a warrant and look around.”
Hubbard said she recently received a letter from City Manager Paul Casey affirming Santa Barbara’s ZIRs would not be discontinued. Casey and City Attorney Ariel Calonne said they had not read Hubbard’s lawsuit and so could not comment.