Two homes in historic Lexington neighborhood stand neglected; one is condemned

Two once-beautiful houses in Lexington's Northside Historic District sit neglected and empty, property of an absentee owner who apparently has not made repairs or visited Lexington in several years, according to neighbors.

Marcelle B. Payton of Chicago bought 412 West Third Street in 2004, paying $156,500. The house has deteriorated to the point that it was condemned earlier this year by the city's Division of Code Enforcement. Windows and doors are boarded up.

"It's not fit to live in," said David Jarvis, director of code enforcement. Payton has never lived in the house.

Four years earlier, Payton bought a large brick house around the corner from the West Third Street house, at 445 West Second Street, for $210,000.Although the Second Street house hasn't been condemned, the back door is boarded up, the back porch and back steps are missing, box gutters are leaking, and climbing vines have almost covered one side.

Realtor Jim McKeighen, who specializes in handling downtown properties, said one winter when the West Second Street house was not heated, the pipes burst. Later, he looked in the windows and could see black mold on the walls.

"It went from being a very nice house to God-only-knows-what on the inside now," he said.

Code violation penalties of $9,250.60 were levied against the West Third Street house, which was scheduled for a master commissioner's sale on June 11.

"When a property owner is notified of a violation, if repairs are not made, code enforcement starts issuing civil penalties," Jarvis said. "Once a certain number of civil penalties have been racked up, we initiate foreclosure action."

But hours before the sale, Fitzgerald Law Firm in Chicago, which represents Payton, paid the fines, and the foreclosure sale was canceled. A 2011 delinquent tax bill of $2,867.15 also was paid, according to the Fayette County clerk's office.

Linda Carroll, president of the Blue Grass Trust for Historic Preservation, said in an email message to neighbors: "I am reeling. ... Marcelle Payton has once again gamed the system, paid the tax (and fines), and her property will continue to deteriorate while she resides in Chicago. Just this morning, her name appears on a list of delinquent property taxes for about eight properties. We should all be outraged."

Carroll said later: "It is so frustrating because she won't fix up the properties. She won't sell."

Payton lives in a house in Chicago assessed at $1.6 million. A staff employee in the Cook County assessor's office said delinquent taxes against the house from 2009 were sold in 2011, and a lien was placed against that property.

Tim Fitzgerald, Payton's Chicago attorney, said last week that he was never "properly notified" of code violations against Payton's house on West Third Street.

Fitzgerald paid the code-violation fines and back taxes on the house before the foreclosure sale, and he insisted that the property is no longer condemned.

The house is for sale, he said, but "we haven't decided on a price."

Jarvis said code-violation letters are sent to property owners. "We wouldn't send it to their attorney. We would have no way of knowing who the attorney is."

Notices were sent first class to Payton at her Chicago address. "If a letter is not returned, we consider it served," Jarvis said. "Our letters were not returned. We consider she was served."

When a property is condemned, it is unfit to live in, he said. "Just because the fines are paid, the building is still condemned," Jarvis said. "It just means we start the fine process all over again."

The city has been in touch with Payton by telephone and letter on several occasions, Jarvis said. "She appealed a couple of times. She was aware of her property being in violation."

Payton is an elderly woman with serious health problems, Fitzgerald said last week. "We are trying to resolve some issues as a result of that," he said.

Efforts to reach Payton were not successful. Several calls to her house were not answered.

Michael Satterly, who owns well-maintained houses on either side of Payton's property at 445 West Second, said the last time he saw Payton was four or five years ago, when she came to town.

He keeps her lawn mowed. "I feel bad for her. I want to be a good neighbor," he said.

Satterly said Payton bought property in Lexington because her family originally was from Kentucky.

Richard McKenzie and his partner, Victor Attard, bought the house next door to Payton's house on West Third Street in 2008. They have never seen or met Payton.

"We never imagined the situation would drag out like this," McKenzie wrote via email. "We moved here from San Francisco, where a dilapidated home like this one would sell for $2 million, then get renovated and bought for $10 million."

But every year, McKenzie said, he and Attard "notice the house deteriorating more and more."

Jarvis understands neighbors' frustrations.

"All we can do is issue civil penalties against properties and put them in foreclosure. We don't have eminent-domain capabilities. The city can't just take your house away from you," he said.

Payton put both houses up for sale a few years ago and asked close to $1 million for each, McKeighen said. Neither property sold, and the "for sale by owner" signs came down.

This story was originally published June 19, 2012 at 5:09 PM with the headline "Two homes in historic Lexington neighborhood stand neglected; one is condemned."