How does a house get tagged?
It'd only get tagged if an insurance claim had been filed, or if the house figured prominently in a criminal case (such as being confiscated as part of a drug prosecution). I think it's difficult to get "tagged" in the latter, although by the rules the seller should include the disclosure from hell as part of the transaction.
Of course we'd love it if it sat vacant for years. Every recession has a silver lining.
You mean as a shelter for vagrants, unruly teens, and meth producers?
The neighbors across our cul-de-sac moved to his employer's Japan branch the weekend we moved in (over a decade ago). They turned their property management over to a local church which uses it for committee/group meetings, short-term lodging for guests/speakers, and a rectory for an occasional contract employee. Whatever cash flow exists probably pays the property taxes.
When it's occupied, life is good. (The current tenant runs their youth group and is an excellent musician, so we get free concerts on weekday late mornings/early afternoons.) We generally meet interesting people and get invited over for the occasional talk-story or potluck. The religious aspect isn't an issue, although the occasional "Hallelujah!" has been known to break out after an exceptionally fervent witness.
When it's vacant there are perpetual problems with its alarm system going off, water sprinklers breaking and exterior water valves being left running, neighborhood teens using the property (well, actually using each other, but on the property), and last week's trash attracting this week's rodents. I can only imagine how bad things would get if the property was effectively abandoned.
So if the next-door house is not going to be properly cared for (including remediating the permit problems) then perhaps your neighbor could consider donating the property to a local church or other religious/civic organization. Even a teardown/vacant lot would be preferable to a derelict shelter.
I'm surprised you & Lena haven't contemplated a little entrepreneurial property development & landlording... think of the Adsense revenue your blog could generate!