Cities/municipalities do this in order to "incentivize"(so to speak) people into fixing the problem. They would not actually fine a person that was working on fixing the issue. They are just saying, "Hey we know you have a giant hole in your house, we know it's not you're fault, but you do need to get those repairs started to bring your house back up to code."

They do this because there are some people that would just half-ass some repairs or leave them unrepaired altogether. This is a big issue with burned down houses. A lot of people will just abandon the property of a burned down residence if they don't have the means to repair it.

Again, there is absolutely zero chance that the city would actually fine the guy if he was actively working to resolve the problem.