Continuing Financial Crisis Leads to Vacant Properties, Vulnerable to Vandalism, Metal Theft

Brooklyn, N.Y. — Thieves who broke the locks on an unoccupied apartment building stripped the entire building of its copper piping, valued at more than $30,000.

Las Vegas — The entire electrical system, including copper wire and switch gear, was stolen from a vacant grocery store in an otherwise-occupied commercial shopping center. The thieves damaged the plumbing system and stripped the rooftop air-conditioning units of copper coils. The insurance claim exceeded $250,000.

Minneapolis, Minn. — When thieves damaged a vacant apartment building to steal copper pipe, they broke the piping that carried natural gas to the building. Later, a spark ignited the accumulated gas, causing an explosion that flattened the building. The building was in foreclosure and had not been secured.

In communities across America, several factors have combined to create a “perfect storm” of property risk. First, the growing credit crisis has led to record numbers of foreclosures, leaving scores of residential and commercial properties vacant. Second, fiscal pressures mean that many communities do not have sufficient law enforcement personnel to patrol these properties. Third, market prices for metals and other commodities have skyrocketed in the past several years.

The result?

Increasingly, vacant properties are being targeted by thieves who strip buildings of copper wiring and plumbing; appliances; woodwork; and other materials — even windows and doors. These criminals can cause enormous damage, often rendering the buildings uninhabitable and unsalable.

Foreclosed properties are particularly vulnerable. Because electric and telephone service is usually shut off, the security alarms, monitoring systems and lighting may not be operational. And foreclosed properties are easy to find, not only because of signs on the property, but because lists of foreclosed properties are readily available from government agencies. Thieves are known to have obtained foreclosure lists to identify properties that they can burglarize with little risk.

Some New Laws May Help Track Thieves

Until recently, property owners and law enforcement officials had little recourse. It is easy for thieves to convert scrap metal to cash, and unscrupulous recyclers readily accept salvaged copper, often paying up to 90 percent of market price. Most of the stolen material is difficult to trace, and operators of scrap yards and recycling centers have not been required or encouraged to take any action to impede criminals or to report illegal activity. Although metal prices have dropped, metal theft continues to plague property owners and law enforcement officials.

In California, several new laws should assist state law enforcement officials in identifying and apprehending these thieves. Among other provisions, the new laws require recyclers to maintain identifying information about scrap metal sellers and report this information to local police each month. The bill also requires recyclers to withhold payments from sellers for three days; this removes the “quick cash for scrap” situation that has made metal theft popular.

According to the National Conference of State Legislatures, at least 26 states have passed widely varying laws to address the theft and sale of scrap metal. While a few of these laws criminalize the actual theft of metal components, most of the legislation focuses on requiring recyclers and scrap dealers to maintain records of their transactions, including the identities of those who bring in scrap for sale. Similar efforts are underway at the federal level. In October 2008, bills were introduced in the U.S. Senate and House of Representatives that would require certain metal recyclers to maintain records of transactions. No further action has been taken with the proposed federal legislation.

While these laws may help enforcement officials track down metal thieves and unscrupulous dealers, property owners should still take all necessary steps to protect vacant or unoccupied properties, because by the time the recycler has to decide what to do with scrap metal brought in for resale, the property damage has already been done.

Unoccupied Properties Require Stringent Risk Management

A vacant or unoccupied property may be as large as an entire manufacturing complex or as small as a single apartment or a small retail space in a strip mall. Regardless of size or location, vacant and unoccupied properties should be protected by appropriate, adequate insurance and sound risk management and maintenance programs. Following are suggestions agents should pass along to customers.