Connecting the Dots | New Ordinance in Orange, CA

The following is the complete transcript of this episode of The AC Current | Connecting the Dots.

One of the things I enjoy about what I do is connecting the dots.

Sometimes the biggest opportunities in real estate don't start with a listing. They begin with a conversation, a policy change or a quiet decision made at a City Council meeting that most people never hear about.

Today I wanna connect a few dots with you, I came across an article this week about a new ordinance in the city of orange and honestly I don't think many people are talking about it.

At first I read it and thought "Okay, that's interesting", but the more I thought about it the more questions I had.

I've spent more than 25 years in title insurance and one thing I've learned is that government rarely creates real estate transactions, what government does create is incentives. And incentives change behavior.

Sometimes that's exactly what policymakers intend, sometimes there are unintended consequences. Either way people make different decisions, so today I simply wanna walk through what happened, share what immediately came to my mind, and then I'd really like to hear what you think.

Because I have a feeling this story might be bigger than it first appears so here's what happened.

The city of Orange recently approved an ordinance aimed at vacant and abandoned property, Under the ordinance, owners who fail to maintain these properties could face fines of up to five thousand dollars, along with ongoing weekly monitoring fees of more than 13 hundred dollars until they bring the property into compliance.

According to the article, the city estimates there are around 230 vacant or abandoned property and many of them are commercial store fronts.

The city's reasoning actually makes sense. They want to reduce blight, improve neighborhoods, encourage investment, increase housing and commercial activity, and strengthen the city's tax base. Honestly I think most people would agree those are worthwhile goals, but here's where my mind started going in a different direction.

Not because I disagree with the ordinance, but because I've seen how changes like this can influence the decisions property owners make, and that's where I think this becomes really interesting.

One thing I've noticed over the years is that every time the economics of owning real estate change, people change.

Think about it, if the cost of holding a vacant property suddenly becomes much more expensive, some owners will fix it. Some will renovate it, some might look at the situation and say, "You know what, maybe it's time to sell.

Now I honestly don't know how many owners this ordinance will affect. Maybe only a handful, maybe quite a few. I'm not predicting anything, I'm simply recognizing a pattern. When incentives change behavior usually changes too, and when behavior changes, real estate opportunities often follow. That's what really caught my attention.

This is the part that really got me thinking, one thing I've noticed is that Realtors who consistently earn listings usually aren't waiting for the listings to appear they're paying attention to the situation.

Things like probate, trust sales, divorce tax defaults, code enforcement, major zoning changes. These situations don't guarantee a listing, but they often start conversations. So I started asking myself, "Couldn't ordinance like this eventually create similar opportunities.

Not because Realtors should chase distressed owners, I don't believe that's the right approach. But because there may be opportunities to educate, to provide market updates, to connect owners with contractors, to explain their options, to become the trusted local resource, Long before someone decides to sell. To me, that's how lasting business relationships are built.

The more I thought about this, the more questions I have.
How will the city determine that a property is truly abandoned?
How aggressively will these rules be enforced?
How are owners notified?
And if someone ignores the fines, what happens next?
Do unpaid fines eventually become liens?
Would they have to be resolved before a property is sold?
Will they affect title?

Now I don't know the answers to all of those questions yet, and I'm not gonna pretend that I do, but these are exactly the kinds of questions title professionals start asking because eventually issues like these have a way of showing up in the real estate transactions. And when they do buyers, sellers, realtors, escrow officers and lenders all want answers.

Here's a question I find even more interesting, is orange just the beginning? Housing shortages, vacant commercial buildings, budget challenges. Those aren't unique to orange. Cities throughout Southern California are dealing with many of the same issues so if this ordinance proves successful how long before other cities begin considering something similar. Anaheim, Fullerton, Santa Ana, Garden Grove, Yorba Linda.

Could this become a larger trend? I honestly don't know but it's something I'll definitely be watching because today's local ordinance could become tomorrow's statewide conversation. I've shared my perspective, now I'd really like to hear yours.

Am I connecting the dots correctly, or am I missing something. Leave your thoughts in the comments below and if you enjoy conversations like this, I'd love to have you subscribe.

I'm Adrian Crandall, and until next time keep connecting the dots