Are Point of Sale Regulations UNCONSTITUTIONAL????

4 Replies

In Oakwood, OH, an investor took the city to court for their POS laws, that were eventually deemed unconstitutional, because they infringed on the citizens' 4th amendment rights.

"As provided in Thompson V. City of Oakwood, however, it seems that point of sale ordinances that call for criminal penalties (whether or not actually enforced) will most likely be held unconstitutional, at least where no administrative warrant procedure is provided. In other words, for those municipalities who have not yet done so, it is time to revise."

Who else is tired of this POS BS??? I know I am!!

Who believes that POS rules and regulations are unconstitutional and believes that the ruling should be applied to the suburbs of Cleveland? Or any other city, for that matter?

Check out the story below.. Let me know what you think! I'd love to hear your thoughts!

I don't think the POS in and of itself would be unconstitutional, rather the penalty associated with it as in the quote; criminality is questionable. IF POS is unconstitutional, then you could also say that any inspection is also unconstitutional; electrical, plumbing, etc. Also I think, similar to permits, a 'reasonable' fee would not be inappropriate.

In my opinion, a municipality can and should do periodic inspections (external only?, common areas?, Unit?) and if something is not to code (e.g. blocked fire exits), require the owner to fix.

Where they do not provide any service and just impose a fee (e.g. occupancy fee with out doing any inspection), that is an infringement of ownership rights.

I have a fairly strong understanding of the ramifications of the point of sale inspection process based on my buying/selling a few times in my greater Cleveland suburb.  Clearly the courts have ruled "interior" inspections unconstitutional (violates unlawful search and seizure restrictions), so I won't argue that.  I will instead argue what I see as the pros and cons without having to involve any court.  That is, common sense has gone out of the window.  P.O.S. inspections were developed, I would argue, because municipality leadership was unable to devise programs to HELP homeowners with their properties.  Once given life, the P.O.S. inspections because City Departments filled with people who only care about job protection, and certainly not the well being of the community or its members. 

For the 'pros,' I think some people do become motivated to keep their properties maintained because of those laws.  Where I live, there is a every-three-year exterior inspection, and an interior/exterior whenever a house is sold.  That is the only "pro" I can think of.  No buyer is encouraged to buy a house in a community because of its strident P.O.S. policy.  A smart buyer would run like heck from such communities.   I know I will when I purchase another home.  

The "cons":

1.  When it comes to buying/selling a house, the MARKET should be the entity which determines what should be done to a house before it is sold.  Because (in my experience, and via dozens of conversations I've had with others) the inspection process is so arbitrary (a few things are 'caught,' others, even very obvious things, are totally missed), sellers have to do a lot of things to a house that they might not bother doing to sell it.  So, city employees are essentially driving the $ invested in homes going on the market, not the homeowner and/or the Realtors, both of whom are FAR closer to understanding what the market wants than most inspectors.  I know dozens of people who invested in things in their house which neither they, nor the buyers, care about at all (and have nothing to do with the soundness of the house).  

2.  The impact of #1 is that sellers often are NOT investing (because they only have so much to spend) in the things which the market DOES want.  Hence, these policies suppress home values.  

3.  City governments tend to be lousy at this inspection process.  They are not good at quality control and hence the inspection process itself, and the resulting paperwork, is done really poorly.  At best, this makes the City look bad and makes homeowners/sellers (taxpayers!) wonder about what else in the City is so poorly run.  At worst, the leads the homeowners down an infuriating path of trying to get mistakes fixed (City workers tend to not be all that great at admitting a mistake).  I've known homeowners who have had to hire contractors/engineers to write letters that no repair is necessary - this really enrages homeowners when the suspected error is really obvious.  I know one homeowner who was accused of removing a second story porch (violation was painting the railing) in order to avoid fixing the violation.  Who would remove an entire second story porch just to avoid painting the railing?????  Problem was, they had no second story porch EVER.  They fortunately were able to obtain pictures of their house during a block party (where a the previous mayor was in the shot) which showed that there was no second story porch.  The City fought hard insisting that there was a second story porch and the homeowners were starting to think they had to add one!  Point is if you are going to do something as invasive as P.O.S. inspections, you'd better do them right.  Otherwise, you grow a body of homeowners who are much less likely to approve a tax levy the next time one rolls around. 

4.  Many times people who have a bad experience with P.O.S. inspections tell others about it.  If they are people who left the City (for whatever reason), they won't care about bad mouthing the City after they are gone.  So they do.  I know several young people who refuse to buy a house in my community because their parents basically warned them not to. 

5.  It is a stick, not a carrot.  And communities (at least in Cleveland) are trying like heck to attract young home buyers, not repel them.  My research shows that communities which rely on P.O.S. inspections in order to 'maintain their housing quality,' tend to have no incentives (a carrot) to renovate homes.  This, too, leads to poor housing value growth.  Competing communities are getting those young families instead.  

6. It essentially eliminates many young buyers from the potential buyer pool. Nowadays (post-housing-crisis), one really has to have a large chunk of money for a down payment to buy a house. I remember when we bought our first house we scraped together every penny we had for our pitiful little FHA down payment and I prayed the whole month that nothing went wrong because we were broke! If we had to also put down $3 or $5K into escrow and THEN spend $3-$5K to get repairs done to get that money back, we would never have bought the house we did buy. We would have rented for much longer and/or chosen to buy in a different community. WHY would a community want to repel buyers like us? We were both young doctors right out of school, with lots of energy and willingness to learn to do things ourselves - I would say most communities would pay US to move there. But, nope, where I live we literally repel such buyers. Seems to me repelling ANY group of buyers is a bad idea.

6.  The most heartbreaking 'con' for me is its impact on historic homes which really need a ton of sweat equity to restore.  Not all, but some young buyers want to buy a house which is a fixer.  They might not have a lot of money but they have a lot of smarts and are willing to work hard.  My communities essentially eliminates those buyers from the pool (because even if you are going to do the work yourself, you have to put the $ into escrow for the house to sell).  Hence, we are knocking houses down at a record pace because the ones in really tough shape are never sold.  That, I think, is shameful. 


7.  Homeowners are generally adults.  A purchase between two adults should not involve the local government like this.  Frankly, it is none of the City's business if I, a new home buyer, want the wood trim in my basement to be unpainted.  It is my choice to have it that way, not the government's.

My two cents. 

So my two cents... in my opinion the POS was supposed to help the neighborhood and values, however when you require repairs AND money put into escrow, frequently the only people with the cash to do the repairs AND put the same amount in escrow are investors, so we drive the price down. The seller having no other options takes the investors offer if they must sell.  I have had POS amounts of $15,000 in repairs and it had to be escrowed! So effectively I had to have $30k. $15k to pay the contractor now and then wait for my other $15k to be refunded after the city inspected it. I think POS inspections drive down the home values because of this.  The exact opposite of the stated intention.