NEW ORLEANS -- Real estate industry leaders are voicing new fears that innocent rental property owners and managers may have their properties seized when their tenants are found guilty of illicit drug dealings.

Several federal drug laws, including ones passed in 1984 and 1988, empower law enforcement officials to seize and sell property considered an "accessory to the crime," according to Carroll Spiller, assistant chief of the seized assets division of the U.S. Marshal Service.

After a court concludes that a property was used in illegal drug dealings, the property is sold and the proceeds split among the U.S. Treasury and federal, state and local law enforcement agencies.

In theory, innocent third parties, such as a lender or owner, also receive payment for their interests in the property, but real estate officials said that does not always happen.

At the end of September, the inventory of properties for sale or awaiting action in courts throughout the country stood at 3,753 parcels worth $598 million, said Spiller, whose agency is responsible for the management and disposition of seized properties.

The majority, he said, are located in southern Florida, southern California, New York and southern Texas.

What is unknown, though, is how many of these forfeitures involve innocent owners, said Mary Beth Johnson, director of housing affairs for the National Association of Realtors.

"It is not just drug kingpins who lose their properties," she said.

Commonly, law enforcement officials said, the seizure and forfeiture cases revolve around an owner who uses the property to distribute or store drugs, or who purchased the property with drug money.

The situation becomes murkier, however, when the property is a rental and the landlord, perhaps an absentee owner, and the manager are not connected with the drug activity taking place there.

Assistant U.S. Attorney Kathleen Brinkman in the District of Columbia said the courts will not tolerate "willful blindness," particularly if the alleged activity is somehow brought to the owner or manager's attention.

To avoid a guilt-by-association finding by a judge, an owner must take "reasonable steps" to deal with the situation, she said, including notifying authorities of suspicions and at least making an attempt to evict tenants involved in the drug trade.

In August, a federal appellate court upheld a decision to confiscate a 41-unit Manhattan apartment building where narcotics activity took place in 15 of the units.

The owner, the appeals court said, could not support a claim of innocence when the building's common areas were littered with crack vials and pipes, lookouts were posted throughout the building, "steerers" who direct potential drug customers to suppliers were observed repeatedly loitering in the lobby and the owner failed to respond to several calls from police about the matter.

Yet, the law throws into conflict fundamental values of private property rights, tenant privacy and public safety, said Collette Johnson Schulke, an NAR divisional vice president. "It is a horrible balancing problem."

On the one hand, said Greg St. Aubin, a lobbyist for the Illinois Association of Realtors, "You are compelling a property owner, in some cases, to place themselves at physical risk ... {by telling the owner} to turn these potentially dangerous people into the police or we are going to take your property."

Moreover, Schulke noted, "No owner in his or her right mind wants drugs on the property. It devalues the property and places the other residents at risk."

On the other hand, local tenant laws often protect a renter's privacy and may tie the hands of a landlord trying for a speedy eviction, Johnson said.

"When we are talking about suspected drug use, it is their word against the tenant's," she said.

Yet these concerns must be weighed against the health and safety needs of society, said Payton Fairfax, an inspector with the U.S. Marshal Service in Houston.

"We are not going to be able to solve this drug problem without some interaction with the citizens," Fairfax said.

Added prosecutor Brinkman: "The responsibility of the property owner is not substantially different than the responsibility of every citizen to cooperate with the police in the war on drugs."

Although the courts do not expect landlords to serve as "criminal investors," she said, they do expect owners to take action when "a red flagalerts us to the fact that the property is being used as a location for drug trafficking."

Brinkman questioned whether the Realtors' alarm over the plight of innocent landlords is justified.

"It is an exception where we go after someone who is not directly involved in the commission of the offense and try to take their interest ... . If the court finds the owner innocent, then the forfeiture would not go forward."

St. Aubin acknowledged that there are very few documented instances of a truly innocent landlord who has had property seized.

However, he said, Realtors are concerned that state and local law officials may become too "aggressive" in enforcing the federal law when it comes to innocent landlords.

He also is concerned that as states adopt their own seizure and forfeiture laws they will stint on protections for innocent owners.

Maryland State Trooper Gary Lowman said that Maryland's seizure law, which was revised in 1988 to include the forfeiture of real estate, gives plenty of latitude to innocent owners.

A landlord's suspicion of drug activity does not make the owner's interest in the property forfeitable. "Even if the tenant had a prior record of drug raids, that is not enough," he said. There must be "actual knowledge."

Northern Virginia property manager Edythe Frankel, an agent with Century 21 Marraccini Realty, said that she fears state and local officials may step up seizure and forfeiture actions, snagging innocent landlords along the way, in the wake of the recent general election.

A statewide ballot measure passed that redirects the proceeds of forfeiture sales from the state's literacy fund to the coffers of law enforcement officials.

"Now Virginia authorities have more incentive to seize properties," Frankel said.