Land bank to sell properties to occupants for $1,000

Detroit — The Detroit Land Bank has become an unintended landlord, with about 4,500 of its properties estimated to have people living in them.

Sometimes it’s a former owner who lost the home to foreclosure. Others were renters who were left hanging when their landlords walked away. And still more are squatters who have taken over the vacant homes for their own.

On Tuesday, the land bank finalized a pilot program to start selling the homes to those occupying them for $1,000 each.

“This is an effort to start a program to see how it goes,” said land bank chair Erica Ward Gerson. “We will not gain anything by driving people out of the city.”

The group has set a wide net to qualify: They could be former owners, renters, someone who has paid utilities in the home for at least a year or anyone who can prove they’ve made “substantial improvements.” To buy, they have to pay the $1,000 purchase price, pay $100 a month for a year to cover the property tax bill as well as stay current on their water bill. They also have to go through a home buyer counseling course and maintain the exterior of the properties.

If they comply, the occupants will be given the deed after a year.

“Otherwise we are just going to go right back into a vicious cycle,” Ward Gerson said.

Land bank officials have sold houses to four occupants as of this fall. Close to 200 occupants have contacted them so far about buying the properties they are living in.

Occupants won’t qualify if the homes are determined unsafe or if the occupants are deemed “disruptive” to the neighborhood, according to the resolution passed Tuesday.

Land bank spokesman Craig Fahle said the group has removed some occupants through newly implemented squatter laws, although he didn’t have exact numbers Tuesday afternoon. He said most had broken into the homes between the time the land bank had secured the homes and when they were trying to auction them off.

Mayor Mike Duggan has used the land bank as the central repository for most city property, much of it inherited from the county foreclosure tax sale when properties don’t sell. The agency has held its own auctions to sell livable homes to buyers, who are held to rehabilitation deadlines.

It owns about 79,000 properties now.

And it is poised to own nearly a quarter of the city — at least 86,000 properties — by year’s end.

The Wayne County Treasurer has grouped about 6,500 foreclosed Detroit properties with the goal of handing them to the city if they don’t sell at an October tax auction, which ends Thursday.

The county wants $3,186,000 million for the bundle, a high price for the mostly dilapidated, fire damaged homes and vacant parcels. No one had bid as of Wednesday afternoon.

In addition to the 6,500 bundled foreclosures, the land bank likely will inherit thousands of Detroit properties that don’t sell at auction.

cmacdonald@detroitnews.com