1415.05 CERTIFICATE OF INSPECTION OR COMPLIANCE; ESCROW; APPEAL.
(a) No person, agent, firm or corporation shall sell, transfer, convey, accept, obtain or purchase an interest in the title of improved residential real estate, including entering into a land installment contract for the sale or transfer of such a property, without complying with the point-of-sale requirements of this Chapter, including the establishment of an escrow account as required in this Section.
(b) No business entity, domestic or foreign, using a name other than an individual's own personal name, shall sell, transfer, convey, accept, obtain or purchase an interest in the title of improved residential real estate, including entering into a land installment contract for the sale or transfer of such a property, unless such entity is registered with the Ohio Secretary of State as required by Title XVII of the Ohio Revised Code of an entity in order to do business in the State of Ohio.
(c) Prior to the closing of a transfer of improved residential real estate, the seller or transferor shall provide the purchaser or transferee with a current certificate of inspection or a certificate of compliance, shall verify that sufficient funds have been deposited in escrow as required in this Section, shall deposit in escrow a statement signed by the purchaser or transferee acknowledging receipt of the certificate of inspection or certificate of compliance, and such statement shall list thereon the date the certificate was given to the purchaser and a copy shall be provided to the Building and Housing Department.
(d) Prior to the closing of a transfer of improved residential real estate, the purchaser or transferee shall have received a current certificate of inspection or a certificate of compliance, shall have designated in writing with the Building and Housing Department the name, address, and telephone number of an agent who is a resident of Cuyahoga County, pursuant to Section 1409.03, if the purchaser or transferee resides outside of Cuyahoga County at the time of closing and will not occupy the premises as a primary residence, and shall verify that sufficient funds have been deposited in escrow as required in this Section.
(e) Except as otherwise provided in this Chapter, if all violations listed on the certificate of inspection are not corrected prior to transfer of title or execution and recording of a land installment contract, funds shall be deposited with an escrow agent designated by the City, in an amount not less than one hundred dollars ($100.00) and equal to one hundred fifty percent (150%) of the estimated cost of repairs, to pay for the cost to correct all remaining violations. The amount to be held in escrow shall be determined as follows:
(1) The transferor or transferee shall procure a written estimate from a company currently registered under Chapter 547 of the Codified Ordinances (hereinafter referred to as a "qualified company").
(2) The estimate shall be in good faith and shall reflect current market rates for labor and materials.
(3) The cost of repairs shall be itemized, to the extent practicable, in a manner that relates to the point-of-sale violation list.
(4) The Director of Building and Housing or the Director's designee shall determine whether the estimate complies with the requirements of this Section and may reject an estimate that fails to reasonably reflect the fair market cost of repairs.
(5) If the Director of Building and Housing rejects an estimate as provided herein, the party submitting the estimate may provide the Director a new estimate that complies with the requirements of this Section. If the Director rejects an estimate, the Director may send a written notice of such rejection to the party establishing the escrow.
(6) If the party establishing the escrow can demonstrate to the Director of Building and Housing that after a good faith effort he/she is unable to obtain a written estimate from a qualified company, or if the party establishing the escrow makes a request to the Director, the Director may establish the amount of the escrow upon the payment by such party of the fee set forth in Section 1415.04.
(7) The party establishing the escrow may appeal the decision of the Director to reject an estimate of the cost of repairs, or the amount of the escrow if it is established by the Director, to the Board of Appeals within thirty (30) days from the date of Director's written decision or estimate.
(f) A purchaser or transferee of a property requiring substantial rehabilitation, with the approval of the transferor or seller or a signed purchase agreement, may submit a request to the Director for a variance from the escrow requirement, to request a reduction of the required escrow amount of 150% of the cost of repairs to 100% of the cost. The Director may grant such a variance if the purchaser or transferee is a contractor that has been approved to participate in the City's Shaker Renovator Program, or if the purchaser or transferee has a signed contract with a contractor that is a participant in the Program. The Director of Neighborhood Revitalization is authorized to establish rules and regulations for a Shaker Renovator Program.
(g) A seller or transferor, or a purchaser or transferee, with the approval of the transferor or seller or a signed purchase agreement, may submit an appeal to the Board of Appeals requesting a variance from the escrow requirements. In any such appeal, the appellant must demonstrate that:
(1) Special circumstances exist necessitating a variance from the requirements in order to make the sale and repair of the property financially practicable,
(2) The purchaser or transferee has the financial capability to repair the property in a reasonable period of time in order to bring it into compliance with the Housing Code; and
(3) A variance is in the best interests of the City and its residents.
(h) Funds shall be disbursed only upon written authorization from the Director or the Director's designee. Authorization to release funds held in escrow pursuant to this subsection shall be granted upon the determination by the Director of Building and Housing that substantial progress has been made in correcting the violations and that sufficient funds will remain in escrow to correct all remaining violations.
(1) If the funds held in escrow are less than five thousand dollars ($5,000), no funds held in escrow shall be released until all violations are corrected.
(2) If the funds held in escrow exceed five thousand dollars ($5,000) but are less than twenty thousand dollars ($20,000), the Director or the Director's designee may authorize one partial release of funds from escrow.
(3) If the funds held in escrow are equal to or exceed twenty thousand dollars ($20,000) but are less than forty thousand dollars ($40,000), the Director or the Director's designee may authorize two partial releases of funds from escrow.
(4) If the funds held in escrow are equal to or exceed forty thousand dollars ($40,000) but are less than sixty thousand dollars ($60,000), the Director or the Director's designee may authorize three partial releases of funds from escrow.
(5) If the funds held in escrow are equal to or exceed sixty thousand dollars ($60,000), the Director or the Director's designee may authorize four partial releases of funds from escrow.
(i) The Director may approve, in lieu of an escrow being established, a purchase-rehabilitation loan account established through a private or government lender. The Director may require written evidence of the terms of the purchase-rehabilitation loan and other documentation that the Director determines is necessary to evaluate the substitution of the loan for a point-of-sale escrow account. In determining whether to approve the loan as a substitute for an escrow account, the Director shall consider all of the following: the City's experience with the lender in other purchase-rehabilitation loan situations, the lender's oversight and management of such loans, the amount of funds provided for improvements to the property beyond correction of the existing code violations, proof that sufficient funds are being held to pay for repairs to correct all point-of-sale violations, and any other factor that would tend to support a conclusion that the intent of the point-of-sale escrow provisions will be met by the structure and terms of the loan.
(j) In the event the purchaser or grantee of residential real estate, in a transaction covered by this Chapter, intends to demolish the structure or structures covered by a certificate of inspection, the escrow requirements of this Section shall be waived if the purchaser or transferee provides the City a performance bond or equivalent financial guarantee in a form satisfactory and approved by the Director of Law, issued to the City in an amount reasonably calculated, as determined by the Director, to ensure that either the structure or structures are demolished or the violations listed on the certificate of inspection are corrected.
(k) No escrow or bond shall be required if the City is the purchaser or transferee of the property, whether the property is intended to be repaired or demolished.
(l) If all repairs to a property required on a Certificate of Inspection are not completed within a reasonable period of time, as determined by the Director or the Director's designee, the City may withdraw such funds from the escrow account as shall be necessary to pay for the completion of the repairs or demolition of the property, as the City determines to be necessary. The City shall provide written notice to the owner and any lessee or party in control of a property, and to the party that established the escrow, at least thirty days prior to the City's withdrawal of funds from the escrow account.
(Ord. 17-92. Enacted 11-13-17.)