In an action brought by a housing-advocacy group, Cleveland Housing Court Judge Raymond Pianka issued a temporary restraining order (TRO) barring Wells Fargo Bank and all persons acting in concert with it from conveying any interest in any of the properties owned by Wells Fargo in the City of Cleveland, unless a particular property can be shown to be fully compliant with the City’s Housing Code.  The Order applies to all properties owned by Wells Fargo either in its own interest, as trustee, or in any other capacity.  The Order also applies to properties added to Wells Fargo’s inventory in the future. 

The case was initially filed by Cleveland Housing Renewal Project, Inc., a housing-advocacy group, in December, 2008, with regard to a limited number of specific properties in Wells Fargo’s portfolio, and a TRO was issued with regard to those properties.  Following inspections of 48 properties which Wells Fargo sold between December, 2008, and April, 2009, and 78 properties in Wells Fargo’s current inventory, the Plaintiff reported that approximately one-half of the properties in both prior and current inventories had one or more of the following conditions:  open, vandalized, and vacant; overgrown with grass, weeds, and foliage; littered with garbage; or had obvious structural damage or other significant defects.

The Judge agreed with Wells Fargo’s argument that overgrown yards or litter problems on properties that it previously sold cannot necessarily be blamed on it, but the Judge nevertheless stated that a significant number of the properties still held by Wells Fargo were in a defective condition. 

Although Cleveland does not have a point-of-sale inspection ordinance, the judge found  that the Plaintiff had “some likelihood of success” in establishing that the ownership of the properties in the City constituted a public nuisance.  After balancing potential harm to Wells Fargo, the judge found that the issuance of the TRO was in the public interest, stating that although a TRO is an extraordinary remedy, it was necessary in order to avoid irreparable harm to the public. 

The Plaintiff previously posted security for its initial TRO in the amount of $11,000.00, and must post an additional $7,000.00 as security for the expanded TRO.  While the TRO is in effect, Wells Fargo will be permitted to transfer a property only upon filing a motion identifying the particular property, and providing photographs of the front and rear of the property.  The Court will then determine whether that property may be excepted from the TRO, in order to permit its transfer.

The case is scheduled for a hearing on May 27, 2009, at which time the Court will consider additional evidence and arguments on the Plaintiff’s request for a preliminary injunction.

If you are marketing any REO properties located in the City of Cleveland, titled in the name of Wells Fargo Bank or Wells Fargo Bank, as trustee, please contact us as the court’s approval will be required in order to sell the property while the TRO or injunction are in effect. 
 
For a complete copy of the TRO, go here.

If you have any questions on this information, please contact Mr. Larry R. Rothenberg, Esq. Larry Rothenberg is the partner-in-charge of the Cleveland real estate and foreclosure department of Weltman, Weinberg & Reis Co., L.P.A. He is the author of the Ohio Jurisdictional Section contained within the treatise, “The Law of Distressed Real Estate”, published by The West Group. The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan. Larry can be reached at (216) 685-1135 or via e-mail at lrothenberg@weltman.com.  

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