Tenants and Foreclosure

Using This Blog

2012-02-01T20:15:00.000-08:00

If you want to ask me a question, please email me at the address on the right side of the blog. I don't answer most questions in the comments section, as they are too specific to be of general interest. And I want to protect your privacy as well.

What is this blog for?

This blog is for California tenants whose landlords have allowed their rental property (your home) to go into foreclosure. Here you'll find most of the information you need to cope. It won't save your home; foreclosure law is of, by, and for the owning class. It won't make you less angry; you should be angry. What it will do is explain the foreclosure process in California, so that you'll know what options you have and, most important, how much time you have to relocate. Please read the entire blog as, while I try to present everything in a logical sequence, information may sometimes not be where you think it should be.

You'll find various miscellaneous entries at the end when I've been good and re-dated the blog entries, so that the information stays both current and coherent.

What about the rest of us?

If you don't live in California, much of the information here won't help you. Foreclosure laws and procedures vary by state, and I'm not competent to give you much help in dealing with your landlord or your landlord's lender. Having said that, the Protecting Tenants At Foreclosure Act applies to all tenants in foreclosed properties in the United States. I will discuss this legislation in its own section, so that you can find it easily. In addition you should probably read the section on "cash for keys" and the section on protecting yourself from bad landlord and lender behavior, as egregious conduct seems to have spread across the country faster than H1N1 did.

So who the hell are you?

I am a long-ago tenant activist, and I wrote the first edition of this blog a couple of years ago when foreclosure was still relatively uncommon. Mercifully, foreclosure procedure in California is relatively straightforward, so putting this information together wasn't terribly complicated. I'm not a lawyer, so I can't give you legal advice or represent you, and I will sometimes tell you that you need a lawyer immediately. But for most tenants in California communities without rent control or "just cause" eviction, a lawyer will not be able to do any more for you than you can do for yourself. If you do live in a community with rent control or "just cause" eviction, please read my entry on rent control carefully. Foreclosing lenders have been very badly behaved in evicting tenants protected by rent control and "just cause" eviction, so you will need to take action to protect your rights.

I also encourage you to let me know if you run across a problem--or a solution--that I haven't mentioned here. Many of the warnings and strategies that I discuss here have their roots in emails I received from other tenants. So if you run across a new scam or have successfully negotiated your landlord's foreclosure, let me know. My email address is on the right side of the blog. If you want to ask a question, please send me an email. If you leave questions in the comments section, I will only answer those of general interest. Otherwise it clutters up the blog with Q&A that are too specific to be helpful to most people. And sometimes people leave questions that give out personal information they might not want splattered across my blog.

I keep threatening to tidy up the blog, and I do so, one little piece at a time. I am, however, remarkably lazy about checking my links, so please let me know if you find a broken one. I will fix it--promise.

So what's changed since you first wrote the blog?

Remarkably little. I wish I could report that lenders and their servicers had seen the light and allowed tenants to stay in foreclosed properties to keep them occupied until they were sold, but that isn't true. I wish I could report that lenders and their servicers always gave tenants the required legal notice, but that would--unfortunately--be a lie. They're just as ill-behaved as they were in 2007. In fact, some have used the experience of the crisis to refine their nasty tactics. I wish I could report that lenders and their servicers always required that the realtors working for them treated tenants in foreclosed properties with respect and courtesy. But that wouldn't be true either, and tenants who are Latino or African American often receive special discourtesies. Sort of like shopping at Nordstrom's.

The only good things are that Tenants Together has a hotline for California tenants in foreclosed properties, and local tenants' groups are working to protect tenants in their communities. This is particularly important in communities with rent control and/or just cause eviction, as tenants in those communities have rights the State Legislature has not seen fit to grant the rest of us.

The Tenants Together Hotline, in particular, can help with more difficult problems like utility shut-offs, badly-behaved lenders, and the like. In addition, you'll realize that you aren't alone, as more than half a million tenants in California have had to deal with their landlords' foreclosures.

So what are the three most important things the State Legislature could do for tenants in foreclosed properties?

Only three?

Yes, only three. Otherwise we'll be reading far into the night.

Okay, three.

First, all county recorders/assessors should be required to send a copy of any Notice of Default to the occupants of any property on which a Notice of Default has been filed. This gives tenants an early warning of a problem and enables tenants to plan their lives, rather than being at the mercy of the charming fellows we have deciding policy at Wells Fargo and Deutsche Bank.

Second, the State Legislature could enact statewide just cause protections for foreclosed properties. This would, particularly, protect low-and moderate-income communities, where foreclosures leave large numbers of unoccupied, and deteriorating, properties strewn about the neighborhood. Cities tend to be much more assertive in protecting richer neighborhoods, so the state should take the lead in protecting everyone. At the very least, the State Legislature should remove the restrictions on the 60-days' notice for tenants who are not protected by the federal Protecting Tenants at Foreclosure Act (PTFA), insuring that every California tenant gets at least 60-days' notice.

That's actually three, you know, but we'll give you one more.

Thanks. The State Legislature should pass a law like that in Oregon, enabling tenants in properties where a Notice of Default has been filed to withhold rent to recover their security deposits before the foreclosure sale. That would save tenants from having to sue the bank to recover their money. And...

Stop. That's enough.

Special note: if the lender is trying to sell you the house you rent, read this first.

Another note: I'm having trouble getting all the main posts on one page. Until I figure this out, you'll have to click on "older entries" to get to the second set of posts. Sorry.

And an update here.

I'm so vain. Tenants Together puts my picture in the newsletter and I've got to spread it around.

What's Happening? And Why?

2012-02-01T20:10:00.000-08:00

So why are we having a crisis that may cost me my home?

It's not really the foreclosure problem that the President and Congress are worried about. When the fear was that people who couldn't pay their mortgages would be evicted, the powers what be didn't pay much attention. Neither Republicans nor Democrats have ever been much concerned about that. The problem is that the mortgages that couldn't be paid had been sold to investors all over the world and the investors are in danger of losing lots and lots of money. These folks are the banks, investment houses and very rich folk that politicians respond to.

Further the problem is spreading. Because housing prices have fallen rapidly in many parts of the country, homeowners and landlords can't refinance their adjustable rate mortgages (ARMs) and can't sell the building for what they owe on it. In some cases they're being forced to give up the building, while a few are just walking away. And landlords really have an incentive to abandon the property, as it doesn't threaten their homes, just yours.

The broader economic problem is that the credit system has become the substitute for decent wages for two-thirds of the population, as the powers what be sought to end stagflation and increase corporate profits by crashing worker pay. Having spent 30 years on this program, we're now back to the same place, but with a much more precarious population.

I pay my rent. Isn't the landlord supposed to use the money to pay the mortgage?

There's nothing in the law that requires that your landlord use your rent money to pay the mortgage. Landlord groups have been very successful in tying rent payments to the cost of maintaining rental units, but there's no necessary connection. A landlord can use the money to pay the mortgage, buy a Hummer, send his kids to college, or go on a really expensive vacation. Your obligation to pay rent has nothing to do with his obligation to pay the mortgage. It's not fair but, as you'll discover, the real estate interests buy lots of access and don't have to be fair.

And your landlord may have owned the building for a few months, or for many years, and still be facing foreclosure. Some landlords took out loans on their properties to deal with problems any of us could face (job loss, medical expenses, divorce, and the like), but it's more likely that he took out a new loan on your home to pay other expenses (vacation, new car, child's college tuition) or to purchase more property.

Many landlords, seeing their property values increase to astronomical levels, didn't realize that (a) what went up could come down and (b) that they shouldn't buy a building where the rent payments required that they put in a couple thousand dollars a month to pay the mortgage. Some were assuming that they'd be able to sell the building purchased with the proceeds of refinancing your home for a handsome profit, while others believed that rents would rise sufficiently, and sufficiently quickly, to cover their costs. When neither of these things happened, they either decided, or were forced, to let your home go into foreclosure.

Foreclosure Procedure in California

2012-02-01T20:05:00.000-08:00

Okay, so give me the procedure, in an easy list form.

[Please note that this procedure is specific to nonjudicial foreclosure in California. Other states with nonjudicial foreclosure have different procedures, and judicial foreclosure is a court action against the landlord.]

Here's what happens:

1. Your landlord doesn't pay the mortgage.

2. After a few months, the lender files a Notice of Default.

3. Your landlord has three months to cure the default. That's legalese for paying the mortgage or, if possible, negotiating new mortgage terms with the lender.

4. If your landlord doesn't pay or can't work out an agreement with the lender within the three months, the lender can file a Notice of Trustee Sale and put the building up for auction. The Trustee Sale will be at least 20 days from the filing of the Notice of Trustee Sale, but it can be longer.

5. Once the building has been sold, and the vast majority are "sold" back to the lender these days, the lender can, if your aren't protected by rent control or "just cause" eviction protections, serve you with a 90-days' Notice to Quit (quit is legalese for move and give up possession) or to the end of your lease if your lease expires more than 90 days after the date you receive notice from the lender.

So now for the long version, please.

Most foreclosures in California are nonjudicial for a variety of reasons I won't get into here. That means that the lender doesn't have to got to court to foreclose when the borrower doesn't pay. After your landlord has missed several payments, the lender files a Notice of Default with the County Recorder. If your landlord doesn't either pay the arrears or negotiate a deal with the lender within three months, the lender can file a Notice of Trustee Sale and and try to sell the building at a courthouse auction. Sometimes it will take lenders more than three months to get around to filing the Notice of Trustee Sale and selling the building, but it will be at least three months from the filing of the Notice of Default.

It may take more than three months because the lender and your landlord are negotiating a settlement, or the lender maybe overwhelmed with foreclosures and can't process them quickly. If you live in a house or condominium, the lender may not want to file the Notice of Trustee Sale because the lender would have to pay the condominium or homeowner association dues. (That leaves the tenant in limbo, in that no one is responsible for the building, but that's not necessarily a bad thing, as no one will be asking for rent either.)

In California, the Notice of Trustee Sale should be posted at the property. This is often the first notice that tenants have that there is a problem. Most buildings don't sell at auction and the lender ends up taking the building back. The lender then enters the default with the County Recorder, and takes possession of the building. This process can take from six months to a year, depending on how quickly your landlord's lender moves.

So tenants don't find out about the foreclosure until some notice gets posted on the garage door?

Well, not always. Very occasionally a landlord will tell the tenants that he's abandoning the property. Sometimes tenants find out that the building is in foreclosure when realtors who specialize in foreclosure sales start circling the building. Some landlords lied to their lenders, claiming to live at the property, and the tenants find themselves deluged with mail from the loan servicer or lender. And if you live in San Francisco, you should receive a warning from the County Assessor if a Notice of Default is filed on the property where you live.

For many tenants, though, the first notice is the Notice of Trustee Sale. But since the passage of SB 1137 in July 2008, a copy of the Notice of Trustee Sale should be mailed to properties where tax bills and the like are sent to another address, with the following additional notice:

Foreclosure process has begun on this property, which may affect your right to continue to live in this property. Twenty days or more after the date of this notice, this property may be sold at foreclosure. If you are renting this property, the new property owner may either give you a new lease or provide you with a 60-day eviction notice. However, other laws may prohibit an eviction in this circumstance or provide you with a longer notice before eviction. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights you may have.

Even though this is, for many tenants, the first warning that anything is amiss, it at least notifies tenants that the lender is required to give them a 60-days' notice. (Please note that this notice is now incorrect, in that it provides only a 60-days' notice, and federal law now requires a notice of at least 90 days.) However, as I noted above, if your landlord took out the mortgage on your house as an owner-occupier, you will not receive this notice. The lender is required to send it only to those addresses where the mortgage and tax notices are sent to another address. So if your landlord's tax bills come to you, you should pay attention if you're suddenly receiving lots of official-looking mail from mortgage service firms and the local tax collectors.

Unfortunately, the Legislature dumped a provision that would have required that tenants receive a copy of the Notice of Default. Had tenants won the right to a copy of the Notice of Default, that would have given them an extra three months notice. The Legislature, though, was swayed by the argument of the mortgage bankers--that sending a copy of the Notice of Default would violate the landlord's privacy. Uh, the Notice of Default is a public record. (Oh, how I wish I could get away with making dumb arguments like that!) Many tenants, in fact, find out that a Notice of Default has been filed when realtors who handle foreclosure sales start nosing 'round the house.

My landlord's lender has filed a notice of default. Can I move?

If you have a month-to-month rental agreement, you can move at any time. Just send your landlord a letter stating that you'll be moving in 30 days. If you have a lease, you'll have to negotiate with your landlord to leave early, and there's not much you can do if he won't let you out of the lease. And your landlord may well want to continue collecting rent from you until the foreclosure. But your landlord cannot collect rent from you for periods after the foreclosure sale. (Some landlords have managed to collect rent for months after the building was taken back by the lender, and the tenants then have to sue the former landlord to recover the money.)

I have a year's lease. Can the lender evict me if it hasn't expired?

In most cases, no. Under federal law tenants may remain in their homes until their leases expire, or for 90 days, whichever is later. The exception is that if your home is sold to an owner-occupier, your lease may be voided. However, you are still entitled to 90-days' notice to vacate. So if you have more than 90 days left on your lease, you'll generally get to stay for the term of the lease. If you have less than 90 days left on your lease, you'll receive 90-days' notice.

Do I have to pay the rent?

Most of the time, yes. Your landlord owns the property up to the day of the Trustee Sale. So he can collect rent until then. And since most rental agreements and leases require that the full rent be paid on the first of the month, you may have to pay the full rent, even though the landlord is going to lose the property on the fifth. You can try paying the rent for the period up to the date of the Trustee Sale, but the landlord could serve you a 3-days' notice to pay rent or quit, and then you'd have to pay the rest of the rent for the month.

The lender may not collect rents for periods prior to the Trustee Sale, and may not collect rent if you've already paid your now former landlord for the month in which the Trustee Sale occurs. If, for instance, you paid the April rent on the first, and the Trustee Sale was on the fifth, the lender cannot collect the rent for April again. You have met your obligation under the rental contract.

It gets a bit iffier if you paid several months rent in advance. While you paid the landlord when he owned the property, you paid for periods after the Trustee Sale, and that's a more complicated legal issue. If you must pay rent in advance, be sure that your agreement to do so is in writing, so that you have some proof of the advance payment. Better still, don't pay rent for several months in advance. And ferhevensake, don't ever pay the rent in cash. It's a large sum of money; you want a paper trail better than a receipt on the back of an old envelope.

What if I don't know who owns the building?

Sometimes both the landlord and the lender come round demanding rent from you. Before handing anyone a check, call the County Recorder and find out who owns the building. If the Trustee Sale was canceled or hasn't been scheduled, you should pay the rent to your landlord. If the Trustee Sale did happen, find out the name and address of the new owner (whether the lender or someone else). If it's not clear who the owner is, send both your landlord and the lender a letter stating that it's unclear and that you will hold the rent until you receive definitive word.

Anything else?

I hope that I don't have to tell you that just because someone comes round demanding the rent, you don't have to hand him a check. On occasion, scam artists have gone round to foreclosed properties, claiming to be the agent for the lender, and demanding the rent. And on occasion, tenants have given them the money. It would be helpful if I could say that no realtor would come round demanding the rent the way the loan sharks of yore demanded payment on the loan, but it's not true.

But you should not hand it over. Explain gently but firmly that you do not hand over checks for large sums of money to anyone who demands same, and that you will wait for the official notice from the lender, and that then you will mail the check to the address noted.

What Happens Next?

2012-02-01T20:00:00.000-08:00

And after the foreclosure sale?

It depends. That's helpful, isn't it?

First, once you've found the Notice of Trustee Sale tacked to the garage door, you should notify the lender IN WRITING that you are a tenant living at the property. Give the lender your contact information. In some cases this will be the first inkling that the landlord doesn't live there, as some landlords got loans for properties by claiming that they were going to live at the property.

However, if you've notified the lender that you are a tenant living at the property, and given the lender your contact information, it will also notice more unscrupulous lenders that they cannot simply "evict" your former landlord from the property. And that's a good thing, because the first notice that you would receive would be the notice of eviction from the local Sheriff, giving you only a few days to move. (Unfortunately, should that happen, you need a real lawyer, and fast.)

Legally what should happen is that you should receive written notice that the property has been "sold"--either back to the lender or to a new owner. You would then know where to send the rent and who is responsible for repairs, maintenance and the like. This doesn't always happen though. Sometimes people aren't contacted for months after the foreclosure sale. In other cases the agent for the owner shows up and threatens tenants with immediate eviction.

So what do I do?

Know your rights, first of all. Second if the lender doesn't show up for months, don't spend the rent money on a vacation. The lender has the right to collect the rent, and may ask for it. This is particularly important in rent-controlled properties, or in communities with foreclosure eviction moratoriums, as the unscrupulous lenders have been known to try to evict protected tenants with a 3-days' notice to pay rent or quit. In some cases they did it after informing the tenants that they didn't have to pay rent. (As always, if you make an agreement with the lender's representative, get it IN WRITING. And yes, I am going to keep putting "in writing" in upper case letters because it is so important.)

It's very likely that, however, you will receive a personal visit from the lender's representative, usually a realtor. (The realtor is chosen for a couple of reasons. First he is probably the person who will handle the sale of the building. Second he is not bound by the legal constraints that, say, a lawyer is, and can lie to you with impunity. A lawyer who tried to trick you out of your rights could be disbarred.)

And then, and then?

Let's go through the possibilities.

On the Various Moratoriums

2012-02-01T19:55:00.000-08:00

But first, how will the various state and federal foreclosure moratoriums affect me?

There are so many moratoriums on foreclosures now that it's almost impossible to keep track of them. With the exception of loans held be Fannie Mae and Freddie Mac though, most of them have no direct impact on tenants. In some cases lenders may negotiate with landlords, particularly if the landlord lives in another unit in your building, but most of the negotiation requirements are directed at owner-occupied housing. However, tenants may get a short reprieve because some landlords bought properties claiming to be owner-occupiers, and it may take the lenders some time to find out that the landlord doesn't live at the property.

Now this raises and interesting issue. In California, until the Notice of Trustee Sale is posted, you're better off if the lender thinks the owner lives at the property. That's because the various moratoriums apply only to owner-occupied properties. So if the lender thinks the landlord lives there, it takes more time for the lender to move to the auction.

BUT, once the Notice of Trustee Sale has been posted, you want the lender to know that you are a tenant residing at the property. First, tenants receive 90-days' notice after the foreclosure sale, while owners can be evicted on a 3-days' notice. And if you live in a community with rent control/just cause eviction protections, you want to make sure that they know a tenant resides at the property. Notifying the lender of your status will make it less likely that the lender will try to "evict" the landlord, sidestepping the laws protecting tenants in foreclosed properties.

What is Cash for Keys?

2012-02-01T19:50:00.000-08:00

Please get any cash for keys agreement in writing. Banks and their agents frequently offer what appears to be a cash for keys offer and then renege when the tenants move.

The realtor who is working for my former landlord's lender came by yesterday and offered us money if we'd move out within 30 days. Should we take it?

That depends. Your first consideration should, of course, be whether you can find a new place within the 30 days. It may be that you've seen a better place 'round the corner for less rent than you're paying now. (I know, dreaming, but it can happen.) If that's true, you might want to tote up the cost of moving and your security deposit, with a percentage for the hassle of it all, and see if the lender is willing to agree to that sum. If the lender agrees to that sum, you'll need to prepare a written agreement, detailing your moving date, the amount of the payment and how that payment is to be made. In ALL circumstances, that agreement should be in writing and signed by an authorized representative of the lender. In the event that the lender reneges and, when you turn in the keys, no cash is forthcoming, you can sue the lender in Small Claims Court to recover the funds.

But if you have children or pets or are disabled, and have specific requirements, you may need the 90 days more than the money, so consider carefully whether you want to put yourself under that kind of time constraint. If you don't, you are entirely within your legal rights to reject cash for keys, and demand a 90-days' notice. And if you are protected by just cause eviction protections or a local moratorium on foreclosure evictions, you'll likely just want to stay in your present home. And no matter how much pressure the realtor or lender's agent puts on you to move quickly, you are under no legal obligation to take a cash for keys offer. And if the lender's representative becomes nasty or rude, you may ask him to leave. If you are threatened or assaulted, it's a matter for the police.

So if I were deciding whether to accept a cash for keys offer, I'd consider the following:

1. The protections afforded by state and local laws. If those don't allow eviction after foreclosure or provide a longer notice period, you should be offered more money, as you have a greater interest in staying in your home.

And your convenience, for that matter. It may be more convenient to move at the end of the school year, for instance, and if your 90 days would get you to July, you might rather not move at the end of April. Yes, it is okay to say that moving at the convenience of the owner is not convenient for you.

2. The amount of your deposit. If the cash for keys offer is less than your deposit, it means you're are giving up the difference. Do you want to do that? If the lender prepares the cash for keys agreement, it will most likely state that the agreement settles all claims you have on the lender, which means that you give up your right to sue the lender for return of your security deposit.

3. The cost of moving. Include in this security/pet/other deposits, the cost of movers, or the truck and pizza for your friends, utility deposits, changing your address everywhere, the time you have to take off work to deal with finding a new home etc.

Then tote all these costs up and see if the cash for keys offer is close to your costs.

If the lender offered me 30 days and $500, I'd probably just call off the negotiations as not serious. And I'd hope that you'd do the same. For most units, I'd expect the settlement to be in multiples of $1,000.

I received a notice from a realtor working for the lender, offering me $500 cash for keys if I'd move in 10 days. The notice said that if I didn't take the offer, they'd begin the eviction process and the Sheriff would evict me. Is this true?

Well, what's important here is what the notice doesn't say. It doesn't say that the lender would have to serve you with a 90-days' notice to vacate and wait for the 90 days to expire before filing with the court to evict you in an unlawful detainer action. Only after the conclusion of the court action would the Sheriff be able to evict you from the property. As I've discussed elsewhere, you must move before any court eviction is filed, but that comes after your 90-days' has expired. It appears that lenders have developed a standard form notice making this offer, as many tenants don't know their rights and are rightly frightened by the very idea of a Sheriff's eviction. And these notices may be illegal. California law requires that the notice be clear and unambiguous, and many lenders are trying to get out of doing their due diligence--finding out who lives at the property and giving them clear notice of termination. So they send an all-purpose notice, evicting either the owner (a three-days' notice), a tenant who isn't protected under the federal law (a sixty-days' notice) and a tenant who is protected under the law (a 90-days' notice). If you don't want to accept the offer, just send a note stating that the sum is way too small, the time to vacate way too short, and that you will wait to receive the legally-required 90-days' notice to vacate.

And this bad behavior, the one where the lender tries to cheat people out of their required notice, is happening all over the country. For example, see this. If you can't figure out what the notice says, and some of them are written to be confusing, get help. And while bureaucracy is not my thing, state legislatures may have to pass laws requiring exact wording for notices to protect tenants' rights.

I have a roommate and my roommate wants to stay. I'm ready to go and want to take the cash for keys offer.

The realtor wants to empty the entire unit. This means that you and your roommate have to agree. If you and your roommate can't come to a meeting of the minds, the "default" would be the notice to vacate.

Do realtors actually threaten tenants who won't take the "cash for keys" offer?

Amazingly, yes. Indeed you will have no greater experience of your status as a second-class citizen than as a tenant dealing with a realtor. Among others, there are the realtors who deal in foreclosures who not only circle the building, but bang on the door and demand tours of the house. That's because most properties can't be examined prior to the foreclosure sale, and the realtor wants a leg up on the competition. But that still doesn't give the realtor any right to demand a tour, so you can refuse any realtor who tries this one.

Fannie Mae and Freddie Mac

2012-02-01T19:45:00.001-08:00

What if my house is owned by Fannie Mae or Freddie Mac?

Both Fannie Mae and Freddie Mac have developed procedures to allow tenants to stay in Fannie and Freddie-owned houses while the GSEs tried to sell them. Fannie has announced its policy, which will allow those tenants who choose to stay to remain on month-to-month leases and will provide assistance to tenants who want to move. The press release is here; the FAQ is here; and the toll-free number (oh, glory be) for Fannie tenants is 1-800-7FANNIE (1-800-732-6643).

Freddie Mac also has information for tenants in Freddie-owned buildings, although it took me several minutes to find it. You can read up on Freddie-owned properties here, and there is an email address for tenants with questions. Be sure that you indicate that you're a tenant at the property.

Robert Doggett at Texas Rio Grande Legal Aid reports that neither the Fannie Mae and Freddie Mac websites has been updated to note the requirement that tenant leases be maintained. Fannie and Freddie tenants have the same rights under the federal legislation passed in May 2009, so tenants should not be offered month-to-month agreements until their leases have expired. (Ht Tenants Together.)

Update 2/2/10: It appears that Fannie Mae has been badly behaved, and has tried to evict tenants in violation of the provisions of federal law. If you receive a letter from an attorney representing Fannie Mae that does not provide you with the requisite notice period, you should get in touch with a lawyer right away. The lawyer will need to write a stern letter reminding Fannie Mae of your rights under law.

Protecting Tenants at Foreclosure Act

2012-02-01T19:45:00.000-08:00

You mentioned new federal legislation. What's that about?

It's a not-so-new law (signed into law by President Obama on May 20, 2009) that protects almost all tenants in foreclosed properties. It requires that they be given at least 90-days' notice to vacate their homes. Now it's likely that we'll hear lots of whining from lenders and loan servicers about the difficulties inherent in managing rental properties. But bank trust departments manage rental property all the time. And if it's too onerous a burden to hire someone to call a plumber to deal with a stopped drain, property management firms would be only too willing to, for a fee, call the plumber for them. (I'm actually amazed that more realtors, suffering from lack of business, haven't hung out their shingles as property managers.)

So what IS this legislation?

Tenants in California weren't as bad off in foreclosed properties as tenants in some other states. In some states the lender could just show up on the doorstep and order the tenants out of the property. Many states provided that tenants need be given only a few days to vacate the property.

But with the passage of SB 896 tenants, no matter where they live in the United States, are given at least 90-days' notice, or the duration of their lease, before they have to vacate the property. This means that if you signed a one year lease in January, you will not have to move until the expiration of that lease at the end of December, no matter when the foreclosure sale takes place. If, however, your lease expires less than 90 days after the foreclosure sale, or you have a month-to-month tenancy, you will have at least 90 days to move. And while that's wonderful news for California tenants, it's even better news for the many tenants throughout the country who face instant eviction after a foreclosure sale.

There are, of course, a few exceptions. The foreclosing lender wouldn't have to give you this notice if you were being housed free or for a much below market rent by a relative. Another exception to the rule is that if the building is sold to an owner who intends to occupy the premises, the lease may be voided. However, tenants in these soon-to-be-owner-occupied properties will then receive 90-days notice.

Tenants who live in communities that provide for more notice, or have just cause eviction and do not allow eviction in event of foreclosure, will not be affected by the federal legislation. In other words, the federal law doesn't preempt better state and local laws. So just cause protections and legislation like the Los Angeles foreclosure moratorium will remain in effect.

You can read the law here and the Tenants Together press release here. And you can read the National Low Income Housing Coalition's letter here.

I have a Section 8 voucher. Am I protected?

Yes. A tenant who has a Section 8 voucher is protected much as unsubsidized tenants are. If this is the first year of your lease, you are protected for the term of that lease, unless the building is sold to an owner who intends to occupy your unit, in which case you will get the same 90-days' notice to vacate that unsubsidized tenants receive. And if your community has rent control/just cause eviction protections that prohibit evictions after foreclosure or limit the causes for eviction, you are protected under those regulations too.

If you do receive a 90-days' notice to vacate as a Section 8 tenant, you should immediately contact your local housing agency for information and assistance in transferring your voucher to another property. And be very careful in dealing with the lender, as lenders and their agents often make a special effort to part Section 8 tenants from their homes, and will often engage in dishonest (and sometimes criminal) behavior to entice Section 8 tenants to move.

Are there any problems with this law?

Well, it's one page that covers the foreclosure laws of all fifty states. It has terms that aren't used in California's foreclosure statutes. This makes for mud, which lawyers can seek to exploit. One that's come up recently is that the lease or rental agreement has to have been entered into prior to the "notice of foreclosure." Well, since a "notice of foreclosure" doesn't exist in California's statutes, does that mean the Notice of Default or the Notice of Trustee Sale?

Update: Congress has clarified the issue in legislation moving the expiration date to 2014. The law now clearly states that the lease or rental agreement must be signed prior to the date of the Trustee Sale. This makes sense, as the landlord can enter into a contract until the date of the sale, and therefore tenants should be protected. It's unfortunate that neither California's courts nor the State Legislature saw fit to fix the problem, but it doesn't matter now. You can read the Tenants Together update here.

It's even messier, though, in states with judicial foreclosure, as cases in those states can take a couple of years.

But what if I am renting from a relative? What kind of notice do I get then?

It gets a little complicated here, but in general you'd receive the 60-days' notice required under SB 1137, passed by the State Legislature in 2008. That's true if you live in a house or multi-unit building, and your landlord relative lives elsewhere. The more serious problem is for those who live in the same building as the landlord, as SB 1137 doesn't apply to tenants who reside in the same property. So a tenant who lives in a property owned by a relative, whether it's a unit in a multi-unit building or a separate house on the same property, might get only 30-days' notice.

What should I do if the notice I receive isn't correct--for instance, if the lender tries to evict me on a 3-days' notice?

Well, it depends how wrong the notice is. If you get a 3-days' notice to quit, you need to take action right away. You should telephone the lender's representative (whether lawyer or realtor) and inform same that you are a tenant at the property, not the owner. If the person on the other end of the line doesn't say "oops, we goofed", you need a real lawyer, as the lender may file an unlawful detainer on the basis of that notice. You'd probably be able to win the case because of the improper notice, but you need a lawyer to make sure that happens and that the court record of the action is sealed.

If you get a 30-days' or 60-days' notice, and should have received 90-days' notice, or you have an unexpired lease, you should get in touch with the lender's representative and inform them of their error. If they say, "oops, we goofed", ask that the rescind the incorrect notice IN WRITING and issue a proper notice. But if the lender won't rescind the notice, I'd first pen a letter stating that the notice is improper and asking that the notice be rescinded. If the lender's representative is still recalcitrant, my conservative nature suggests that you need a lawyer to write a stern letter to the lender for you. You want to deal with the problem before an unlawful detainer is filed, not in court.

I have a lease, but I want to move before the lease is up.

Well, you probably won't have much trouble if the lender would rather you moved. In fact, many lenders offer "cash for keys" to tenants who have leases. I doubt that you'll have any problem, but I'd wait to tell the lender that I wanted out of my lease until he offered me cash for keys.

And If I Can't Move Within the 90 Days?

2012-02-01T19:30:00.000-08:00

What if I can't move in 90 days?

It's possible that you can negotiate with the lender for more time,
particularly if you only need a week or two. A local lender is more likely to
be amenable to an extension than a European bank. (European bankers love the American landlord-tenant system. They can do things here that they would never get away with in European countries, and they tend to do them. My reading indicates that Deutsche Bank has been particularly nasty.) European banks treat American tenants the way US corporations treat agricultural workers in Central America.

If you can't negotiate with the lender, you must move by the time the 90 days is up. If you don't move, the landlord can file an unlawful detainer and ask the court to evict you. Most tenants don't know this, as they aren't often faced with eviction, but the right of private reporting agencies has eviscerated the rights of California tenants to defend themselves in court. Court documents are a matter of public record, and that enables various landlord reporting services to compile information on tenants who have had unlawful detainer actions filed against them in court. These services don't care whether the tenant won or lost the case, since most landlords don't want a tenant who has defended her rights against a landlord. The eviction reporting services look at filings; they don't care how the case was resolved. You must move before an unlawful detainer is filed. Period.

However, do remember that the lender has to give you 90-days' notice and wait for the full 90 days before filing an unlawful detainer. Less than honest real estate "professionals" are still trying to frighten people out of their homes by saying things like, "If you don't take our 45-cent cash for keys offer, we'll begin eviction proceedings." Well, yes they will, but those eviction proceedings don't become a court action until your 90-days' notice has expired.

On Security Deposits

2012-02-01T19:25:00.000-08:00

My landlord has suffered foreclosure and I'm going to move. How do I get my security deposit back?

The return of security deposits is governed by state law. And unfortunately state law lacks any precision in addressing this issue. But it appears that the federal Protecting Tenants at Foreclosure Act decides the issue, as it provides that leases survive foreclosure. This means that the lender, as successor in interest, does have to return your security deposit.

If the lender or new owner demands rent for the 90-day notice period, the lender or new owner must return your security deposit. However, if the lender or new owner doesn't require that you pay rent, you have recovered your security deposit in rent savings.

If you move before the Trustee Sale, you'd recover your rent from your landlord, just as you would if he weren't in foreclosure.

On Rent Control and "Just Cause" Eviction

2012-02-01T19:15:00.000-08:00

I live in San Francisco. We have "just cause" eviction. Can the lender evict me?

Many tenants in California live in communities with rent control and/or "just cause" eviction. Unlike tenants in most of California, who can be evicted "for any reason or no reason at all," tenants who live in communities with "just cause" eviction protections cannot be evicted except for specified good reasons. Tenants can be evicted if they don't pay the rent, trash the place, engage in illegal activities, or disturb the neighbors. Tenants can also be evicted so that the owner can live in the unit, if the landlord is taking the unit off the rental market (pursuant to the Ellis Act), and for a very few other just causes. Foreclosure is not a cause for eviction in most California communities with "just cause."

Some lenders have tried to claim that state and federal law pre-empt local rent control and just cause protections. However, both state and federal laws specifically provide that local rent control and just cause eviction protections are controlling where those laws exist. That means that if local laws provide more protection for tenants, the local laws are controlling. Lenders may still try to make the argument, but tenants have the law on their side and may roll their eyes heavenward on hearing that assertion.

So how do I know if I'm covered under "just cause" eviction protections?

Ah, this question is a set up, as it allows me to explain some of the complexities of these laws. The following communities have both rent control and "just cause" eviction: San Francisco, Oakland, Berkeley, Hayward, Los Angeles, Santa Monica, West Hollywood, Beverly Hills and Palm Springs. San Jose has rent control, but no eviction protections. San Diego, however, has "just cause" eviction, but no rent control. A few other communities have mediation programs or very limited rent control. Those won't help you in this situation, and your "protection" is limited to that provided by state and federal law.

But it gets even more complicated. Some "just cause" laws provide protection to tenants who aren't covered by the rent control provisions of the local ordinances. Yes, it is confusing, but that's because the real estate interests sought (and received, of course) help from the State Legislature in limiting tenants' rights after communities with tenant majorities forced the passage of rent control and "just cause" eviction ordinances. This legislation, knows and the Costa-Hawkins Rental Housing Act or, simply, Costa-Hawkins, imposed severe limits on local laws, exempting all single-family houses and many condominiums from rent control, and requiring that all local laws allow for vacancy decontrol. However, it did not prohibit local ordinances from protecting tenants in these units from unjust eviction, so the "just cause" eviction protections may apply even if your unit isn't covered by rent control.

And it's now even more complicated. The City of Los Angeles passed a moratorium in December 2008, prohibiting eviction of tenants from foreclosed properties for one year, whether or not the house or apartment is covered by that city's rent control law. That means, simply, that all tenants in Los Angeles are protected against eviction after a landlord's foreclosure.

Two other California cities, Richmond and Ridgecrest, have passed "just cause" eviction laws that apply to tenants in foreclosed properties. You can read the Richmond ordinance here and a blog entry on the Ridgecrest ordinance here. Tenants Together did excellent work on this one! Check here for the most current list of communities with "just cause" protections for tenants in foreclosed properties. Update 12/20/11: Merced has become the first Central Valley community to pass "just cause" protections for tenants in foreclosed properties. You can read more about it here.

I am not going to try to explain the intricacies of all the laws here. The best way to find out if you're covered by the "just cause" provisions of your local law is to call the Rent Control or Stabilization Board in your community, a local tenants' organization, or a lawyer specializing in tenants' rights. You'll get better information more quickly by consulting those who answer these questions all the time. And I don't think I need to tell you that you should not depend on the lender for accurate information. Lenders often don't know the local laws, or hope that tenants don't, and try to evict after foreclosure whether or not they have the right to do so. (In Oakland, for instance, the City Attorney has been forced to take action against lenders who try to evict tenants in violation of that city's ordinance.)

What do tenants who are protected against eviction need to do to enforce their rights?

Many lenders will attempt to evict tenants in violation of rent control and "just cause" eviction ordinances. The first thing you should do is to make sure that the lender or loan servicer knows that there are tenants at the property. That means sending a letter to the lender or loan servicer (you'll find that on the Notice of Trustee Sale), informing them that tenants reside at the property being foreclosed and giving them contact information. If the Notice of Trustee Sale has a telephone number for the lender or loan servicer, call and ask for the name of the person handling the property, and address the letter to her. Make a copy of the letter, and mail the letter at the post office. Obtain a proof of mailing.

As I noted above, you should also contact the rent stabilization board or a local tenants' organization. Those groups will have the most up-to-date information on local laws, and will also know how to deal with specific lenders.

Then be very aware of the possible scams the lender might try, a few of which are:

1. Allowing you to stay without paying rent. Then after a few months, the lender either serves you with a 3-days' notice to pay rent or quit, or worse still, serves you with an unalwful detainer claiming that they served you with a 3-days' notice to pay rent or quit and you failed to pay the rent. If the lender offers to allow you to stay rent free, get an agreement to that effect in writing. It's likely that if you demand this, they will not allow you to stay without paying rent, but it will protect you from eviction.

If you receive a 3-days' notice, you must pay the rent. If you receive court eviction papers (an unlawful detainer), see a lawyer promptly.

2. The foreclosing lender files an unlawful detainer against the landlord, ignoring your very clear letter informing the lender of your presence and status. You need a lawyer to handle this--you can't do it yourself. But the lawyer will be very happy to see your copy of the letter and the proof of mailing from the post office.

Some of the scamming has gotten so bad that San Francisco's Rent Stabilization Board is threatening illegal eviction lawsuits against miscreant lenders.

Basic information for tenants in the City of Los Angeles is here.

The San Francisco Tenants Union has information for San Francisco tenants here.

New Legislation Signed

2012-02-01T19:05:00.000-08:00

This information is for California tenants only. Governor Schwarzenegger signed two pieces (yes, two!) pieces of legislation benefiting California tenants. The first, SB 290 (sponsored by Mark Leno) makes the 60-days' notice requirement for tenant evictions permanent. This means that any tenant in the state who has lived in her rental for one year or more cannot be evicted with less than 60-days' notice in "no cause" evictions. And it means that tenant groups don't have to mobilize every couple of years to renew the legislation. However, this does not affect tenants protected by local "just cause" ordinances; those tenants cannot be evicted without cause.

The second bill, SB 120, sponsored by Alan Lowenthal, protects tenants in foreclosed or soon-to-be-foreclosed properties against utility shutoffs when the landlord or lender fails to pay utility bills. In particular, tenants in single-family homes now have the same protection as tenants in multi-family units. Utility companies (gas, electric, water, heat) are now required to give tenants notice that the utility is to be cut off for nonpayment, and to provide a procedure for the tenant or tenants to establish a payment account without having to pay the former landlord's arrearages. Tenants in single-family homes in outlying communities were often forced to pay the former landlord's water bill to keep the water on. (Sacramento Suburban Water was notorious for this.) No longer.

It also allows tenants who pay the bills, when these costs have been included in the rent, to either deduct the cost from their rent payments or sue the landlord for the cost of establishing service or paying the bills. And it prohibits utility companies from requiring large deposits if the tenant can show that she pays her rent on time. (Utility companies were frequently requiring both payment of the arrearages and a large deposit to keep utility service.) Utility services are required to establish and publicize procedures for tenants to deal with these situations; notice of those procedures should be delivered along with any shutoff notice. We would hope that they also publicize them in their newsletters and on their websites as well.

You can read SB 290 here and SB 120 here. And you can read more at the Tenants Together blog. Posted October 13, 2009.

Tenants in Other States

2012-02-01T18:55:00.000-08:00

I mean, it's okay that you're California-centric, but do you have any other helpful information for those of us who live outside your charmed state?

Haha. Bits and pieces. I came to this as a tenant activist from long ago who, because she mercifully lives in a state with nonjudicial foreclosure, was able to quickly digest most of the rules on tenants and foreclosure. I don't know the rules for other states--either landlord-tenant or foreclosure. I did run across this nifty little chart from the National Low Income Housing Coalition. It provides very basic information on foreclosures, where they have been able to glean that information. And they've now come out with a new report that includes more information for tenants facing foreclosure, including timelines for many states. But you should still contact a local tenant organization or legal aid group, as you'll need more help than this provides to negotiate the process. If you live in a small town, try searching for a tenants' assistance line in a major city in your state. The rules may not be the same, as some large cities provide more protections for tenants that the state government allows, but the tenants' organization will at least know what the state law provides.

And if you live in a state that required no notice, or very little, before the passage of the federal legislation, you should read below on the possible bad behaviors of lenders and their agents, as they will use all sorts of nefarious tricks to part you from your home without having to give you the required notice.

I will also remind you to get any agreement with the lender with respect to "cash for keys," additional time to move, return of your security deposit etc. IN WRITING. Any cash settlement should be paid by cashier's check or money order.

Oregon tenants have new rights in foreclosure. Tenants there now have the right to 120-days notice that their homes are under threat of foreclosure. And tenants may withhold rent prior to the foreclosure sale to recover their security deposits. More information is here.

Get It In Writing

2012-02-01T18:45:00.000-08:00

You keep nattering on about getting stuff in writing. Why?

It's not because I'm in love with paper files, let me tell you. It's because I keep hearing about tenants who made "cash for keys" agreements, moved, and then never got any cash. Any agreement you make with the lender or the lender's representative must be in WRITING and signed by an authorized representative of the lender. An oral agreement is essentially unenforceable. If the lender won't put the agreement in writing, the lender doesn't intend to honor the agreement. It's that simple.

And I'll say this here, even though it's opinion and you can discount it entirely. Why would any tenant settle for a payment of $1,500? That's not enough to cover the deposit on a new house, let alone all the costs of moving. Calculate how much the lender is saving by not having to keep the building up for the 90-days' notice period, add your deposit and moving costs, and then a percentage increase for the hassle of it all. That's how much you should be getting--and get the agreement in writing.

Oh, and require a cashier's check or money order. These people are sleazy.

I was asked whether email is good enough for "in writing." Well, yes and no. It's good enough when you're negotiating with your lender's representative. Just print out your email and your correspondent's email and keep them in a folder. Any contract, however, and that would include a cash for keys agreement, should be in hard copy and have the original signatures of both parties. To create a "dual original," just print out two copies of the document and have all parties sign both copies.

On Lawyers

2012-02-01T18:15:00.000-08:00

I want to talk to a lawyer. How do I go about finding one?

If you've read this far, you know that most of the time you're not going to need a lawyer. There are exceptions, though, and when I say that you should get to a lawyer immediately, I mean it. Some situations are serious, and then you do need more help than a blog can provide.

Here's where I get to explain that landlord-tenant law is a specialized area of legal practice, and that going to see your cousin's friend who specializes in divorce and family law is not a good idea. Tenants' organizations often have lists of lawyers who specialize in tenants' rights issues. Some tenants' lawyers advertise in the phone book. You're more likely to find a lawyer in communities with strong tenants' movements than in the Valley or communities without many tenants. You might try contacting a sympathetic local official (someone who doesn't spit when talking about the tenants in the neighborhood) or a city information line. Sometimes a Bar Association referral panel will be able to refer you to a good tenant lawyer.

I don't refer people to lawyers, simply because I'm not competent to judge the quality of their lawyering, and I wouldn't want to send any of my readers to some incompetent. What I can tell you, though, is that most of the lawyers in California who do landlord-tenant law are, in fact, landlord lawyers. So please be careful in selecting a lawyer.

It's unfortunate though that the areas with the largest number of foreclosures have very limited assistance for tenants. Foreclosures occur far more frequently in lower-income communities, and those communities are less likely to be protected by local rent control and "just cause" eviction laws. Local officials are often closely tied to the real estate interests, and are not disposed to support legislation that would be opposed by those interests unless there are sufficient middle income tenants to require passage of these laws.

[If you are a lawyer who does not regularly handle landlord-tenant cases, please read the entire blog. It is important that you understand the entire process and, particularly, the problems for tenants facing unlawful detainers.]

Avoiding a Landlord in Trouble

2012-02-01T18:05:00.000-08:00

It's very important that you check out your prospective landlord before paying any money or giving out any private information--like your bank account or Social Security numbers. There have been a raft of stories now detailing the perfidy of landlords who, facing foreclosure, rent out the house to unsuspecting tenants, and opportunists who break into foreclosed properties, and then collect security deposits and rents for houses they don't own.

As a tenant, you have to protect yourself. You have NO friends. The State Legislature is not your friend. The Board of Supervisors is not your friend. The City Council is not your friend. All of these people work to support and defend the interests of the real estate industry. So here's how you can give yourself a wee bit of protection:

1. Property management firms are not your friend either. They receive a percentage of the rent from your landlord and are therefore working for him, not you. Do not assume that the property management company knows or cares whether the house is about to go into default. Do not make the assumption that, because a landlord has hired a property management firm, he is somehow more trustworthy.

2. Insist on knowing the name of the property owner. Do not give out any personal information to anyone until you have that information. Ask to see identification. I mean it. Anyone can show up at a rental unit and say that he's the owner, Joe Smith. You want to know that he is--in fact--Joe Smith. If the person showing the house says that he's a property manager, get his card and the telephone number of the owner. Then call both the property management office AND the owner to verify that it's a legitimate rental. Reputable landlords and property managers should expect that tenants would want to insure that they aren't paying large sums of money to people who have no right to rent the property.

If you have one of those cell phones that takes pictures, take a couple of pictures of the unit, and just get the person showing the property into one of them. Then, if it does turn out to be a scam, you can present your local police department with a photograph of the scammer.

3. Then call your County Recorder and find out the following: when the last mortgage was taken on the property, whether or not a Notice of Default or Notice of Trustee Sale has been filed. A Notice of Default is the first step in foreclosing on the building. A Notice of Trustee sale means that the landlord failed to pay the arrears and the lender is going to take back the building. If either of these has been filed, you don't want to move there. Really.

4. Be very careful when considering any property with a mortgage taken out in 2004 or later. You will need to ask a lot of questions of your prospective landlord and listen carefully to all responses to those questions to determine whether or not the landlord is in trouble. If the landlord is not forthcoming, it's better to pass on the property.

5. Take a copy of your credit report with you when you look at a property, after inking out your Social Security number. If enough tenants do this, and do not permit their landlords to have that information, perhaps landlords will change their practices. You are, after all, being required to hand out your most important personal number to a complete stranger.

6. Do not sign a lease. If your agreement is month-to-month and the landlord defaults, you can just move. If you sign a lease, you have to pay rent until the foreclosure sale. (I know that this goes against the ruling conventional wisdom, but so many soon-to-be-foreclosed landlords have signed leases that it no longer makes sense to sign one.)

If you want to sign a lease, consider adding a provision that allows you to break the lease if any lender (many properties have more than one mortgage) files a Notice of Default or Notice of Trustee Sale on the property. If the landlord will not agree to such a provision, it's a clue that all is not well with his finances.

You should also insist on a provision, whether you have a lease or month-to-month agreement, that allows you to withhold rent to recover the amount of your security deposit if any lender files a Notice of Default on the property you are renting. If, for instance, you paid a month's rent and $250 for each of your two pets, you would, after a Notice of Default was filed, be allowed under the terms of this provision to withhold an entire month's rent and then part of the next month's rent for the $500 you paid for your pet deposit.

Don't spend the money though. Were your landlord to cure the default (pay the arrears or renegotiate with the bank), you'd have to pay back the entire deposit to your landlord.

I know it's odd, as tenants haven't generally been able to negotiate lease terms. But the landlord puts your home in jeopardy by not paying his mortgage(s) and you should be able to protect yourself as any contracting party can.

7. Be very suspicious of any landlord who overlooks your foreclosure or credit problems in exchange for a large deposit. Many people who have suffered foreclosure themselves are being victimized by the unscrupulous, who allow tenants to rent in exchange for large deposits. Then the tenants finds out the landlord hasn't been paying the mortgage.

8. You do not want to get into a "lease option." Really. Some landlords are offering "lease options" to unsuspecting tenants. What this means is that you agree to pay an upfront deposit of $5-10,000, and a higher monthly rent, for an option to purchase the property at a set price at the end of the lease period (which can range from one to three years). Lease options are never a good idea in the best of times and, in the present period, are potentially disasters. First, the value of the house may fall over the option period, and you will have agreed to pay much more for the house than it is worth. But you've also put in a lot of money, so not exercising the option (not buying the house) means that you are giving up your deposit and the additional rent you paid. Second, if the landlord defaults on his mortgage during the lease period and the lender forecloses, you lose all the money you paid for the option. And if you did enter into a lease option, you'd have to keep track of your landlord's mortgage payment--demanding copies of the canceled checks or a print-out from the lender showing that the payment had been made. I've had a couple of tenants tell me that their soon-to-be-foreclosed landlord offered them lease options, but the tenants refused them--counting themselves lucky when the building then went into foreclosure. Landlords are trying this scam to either get enough money to pay the mortgage for another month, or to milk the building for everything you're worth before foreclosure. Please--just say no.

9. Do not ever pay the rent and deposits in cash. Cash is untraceable. You can't stop payment on cash. Pay by check.

Helpful Information With No Other Home

2012-02-01T17:55:00.000-08:00

Just a few things I've come across in hearing from tenants:

1. I remind you again to get any agreement in writing. Please. Lenders are making "cash for keys" agreements and then, once they get the keys, not paying the agreed sum. You give the lender's representative keys, she or he hands you a cashier's check or money order. If that doesn't happen, you've just been scammed, and if you don't have a written agreement, you have no evidence that you ever had any agreement. I've not yet gotten to the point that I say everyone should just take the 90 days, but I've yet to hear of a good, easy "cash for keys" agreement.

2. If your building is managed by a property management company and a Notice of Default is filed on the building, ask the property manager if the company has the security deposits in an escrow account. If they do, ask if you can apply the deposit to your rent payment. If it appears that the landlord has abandoned the property, the manager may let you do this. I've heard of a few cases so far where the management company did just that, so there's no harm in asking. That insures that you get your deposit back before the foreclosure sale.

3. I've been asked a couple of times why the lender didn't file a Notice of Trustee Sale when the Notice of Default had been filed many months earlier. The three months between the Notice of Default and the Notice of Trustee Sale is the legal minimum, but the lender isn't required to file it promptly. In some cases, the lender and your landlord may be negotiating, in some cases the lender is so overwhelmed that they just haven't gotten 'round to it. If you live in a house or condominium, the lender may not want to foreclose because then the lender would have to pay the condominium or homeowner association dues. This leaves you as a tenant in limbo, in that no one is responsible for the building, but that's not necessarily a bad thing. In some cases, no one is asking for rent either.

4. If you want to buy the building you live in after the foreclosure sale, talking to the realtor they send 'round to "encourage" you to leave is probably not worth the trouble. I wasn't sure why this was true, as it seemed to me that selling the property to a sitting tenant would save a lot of grief for everyone. The tenant doesn't have to move, the property doesn't sit empty for months, the lender unloads it promptly--a win-win.

What I suspect is that the Foreclosures-R-Us services aren't set up for that, and that the realtor is paid to clear the building, not sell it. So if you decide you want to buy your house or you and your building-mates want to purchase a duplex or apartment building, you should look at the Notice of Trustee Sale, which should have the name and contact information for the foreclosing lender. Call the lender and ask for the loss mitigation department, determine who is handling that property and begin the negotiations.

And since this was written, some lenders have seen the light as well, and offered to sell the houses they've repossessed to sitting tenants. For those tenants who want to purchase the house they've been renting, this could be a good thing, or it could be an attempt by the lender to get rid of a lemon. So before you decide to buy, please read and consider this.

5. I've had a couple of tenants come across this blog after they signed "cash for keys" agreements, not knowing that they had the right to a 90-days' notice to vacate. What they want to know is whether or not they can get out of the agreement, as the Foreclosures-R-Us realtor who was emptying the building for the lender neglected to mention that California tenants have the right to a 90-days' notice. Remember that realtors are kin to used car salesmen, not lawyers, and don't have to give you that important little piece of information. Unfortunately, it's likely that getting out of such an agreement would be difficult and would require the services of an actual lawyer. After all, unless you were talking with the realtor on the public square, only you and the realtor know that the realtor told you that if you didn't take the "cash for keys" and move within two weeks, the Sheriff would put you possessions out on the lawn, skipping the little piece of information about the 90-days' notice.

That's why I so hope that you're reading this before you signed the "cash for keys" agreement, and not afterwards. And that, if you've run across this just for your own education, that you warn friends, relatives and co-workers to read this before they make a decision, not once they've signed the agreement.

6. It is unfortunate that we cannot legislate decent behavior. But in many cases, expecting realtors to be polite and respectful is asking too much. This seems to be true particularly when tenants refuse the cash for keys offer, and indicate that they know they have a right to a 90-days' notice. (I think realtors get some kind of incentive payment for clearing the building cheaply and quickly.) Always ask for the realtor's card and, if the realtor is rude or abusive toward you, call the manager of the realtor's office to complain. As someone once said to me in a similar situation, "It won't do any good, but you'll feel better."

You always have the right to ask the realtor to leave, and if someone is threatening or assaults you, it's a matter for the police.

7. I've heard of some tenants seeking out soon-to-be-foreclosed houses to rent. While I don't quite understand it--I don't want to have to move every few months--some people who may be moving out of the area might latch onto this as a good solution. They don't agree to pay security deposits, and pay reduced rent, knowing that the building will be going into foreclosure relatively soon.

But--and you knew this was coming, didn't you--some less-than-scrupulous tenants may be renting these properties, and then letting rooms without telling their roommates that the property will soon be going into foreclosure. So if you're joining a communal household, check it out as carefully as you would renting from an owner-landlord. In areas with a lot of foreclosures, it can be difficult to determine exactly what is going on, as many homeowners are renting out rooms to help make the mortgage payments, so if the tenant passes himself off as an owner, you'll only find that out if you do some homework. Caution! Caution!

8. A new scam coming out of Los Angeles, and reported by a tenant there, is one that will, for the sum of $600, keep you in your soon-to-be-foreclosed home for up to nine months. Those of you who have read this far already know that a tenant has at least seven months from the Notice of Default, so paying $600 for that doesn't make much sense. And I think that the claims of nine months would require that the tenant either be very lucky or proceed through an unlawful detainer after the 90-days' notice expired. That's a really bad idea. Take the seven months; save the $600.

9. And yet another scam. With this one a person entirely unconnected to the foreclosing lender shows up on the doorstep demanding the rent. Yes, it is a scam. You should demand to see some proof of ownership and then, before agreeing to move or paying any money, telephone the loan servicer to determine is the demand is legitimate. And mail the rent payment to the lender; do not hand over checks for large sums of money to people who come knocking at the door. (Contact information for the loan servicer or lender, or both, should be on the Notice of Trustee Sale.)

10. Tenants Together, a statewide tenants' organization, has opened a foreclosure hotline for tenants throughout California who are facing foreclosure. You can telephone 888-495-8020 toll-free any time and, if the line is closed, leave a message (with your daytime contact number) for a return call. Or you can send them an email request here.

11. If you are in military service and your landlord suffers foreclosure, you are eligible for relocation assistance. In addition most base legal services are now entirely conversant with the foreclosure laws of the states where they're located and will be able to provide legal information for tenants.

12. In California, and in many other states, lenders are legally prohibited from doing things like changing the locks and/or shutting off the utilities to "encourage" you to move. If the lender tries this, get help. In many cases local utility services have been dealing with this problem for awhile and will help you to get the utilities turned back on. If the utility company is unhelpful, you should get in touch with a local housing organization or legal aid office. They've also been dealing with this problem for awhile and will be able to help. If the lender changes the locks, call a locksmith, and then have the lock re-keyed. Be sure that you keep documentation of any problem and any money you had to pay for utility restoration or the locksmith. If the lender doesn't refund your money, you can take the lender to Small Claims Court to recover money you had to front. And if the situation is really egregious--if you went for weeks without water, for instance--see a lawyer. In many states that's a constructive eviction and you could be awarded substantial damages.

On Political Action and Organizing

2012-02-01T17:45:00.000-08:00

While I hate to have to admit it, President Obama's signature on the legislation giving all tenants at least 90 days to move after foreclosure was welcome. It was particularly important in those states where tenants had only a few days to move after the foreclosure sale. Senator Keith Ellison of Minnesota was a major proponent of this legislation, as was Senator John Kerry of Massachusetts. California's Senator Barbara Boxer was a co-sponsor of the bill. However, California Representatives Tom McClintock and Darrel Issa both voted against the House version of the bill.

Now for the organizing part. Some communities have had notable success in preventing tenant evictions from foreclosed properties, either by putting pressure (picketing, demonstrations and the like) on lenders who want to evict the tenants or by legislation (eviction moratoriums). So in deciding on organizing strategies, you'll need to think through at least some of the following:

1. Do you really want to live at the property? If you don't want to stay, there's no point in organizing your neighbors and community to enable you to stay there.

2. It's more difficult, but not impossible, to organize to stay in a single-family house. Multi-unit properties are more likely to remain rentals anyway, so there's less reason to evict tenants in order to sell the building.

3. Are there already a lot of empty foreclosed properties in your community? You'll likely get more public support if there are empty, deteriorating properties around you. An occupied property is better for the community than an empty one.

4. Are your neighbors incensed at the thought of your eviction? If your homeowner neighbors respond to the news with an "oh well, too bad," you probably aren't going to get much help. But if they're putting up window signs denouncing your landlord's lender or calling your city council representative to demand action, you have a better shot. It's likely that it has never occurred to your homeowner neighbors that they could take action to defend the tenants in the neighborhood, but enough evictions and empty houses could spur them to action.

5. Are local tenant organizations or neighborhood associations interested in the issue? If they are, you might be able to organize some public protests or raise the issue of tenant evictions with local legislators.

Sending Questions to the Blogger

2012-02-01T17:28:00.000-08:00

How do we ask questions of you?

Well, just send me an email. My address is on the right of the blog, under my picture. @ is spelled "at" to keep spambots away from my address. (I do not need any Viagra, hot girls, or prescription pharmaceuticals, thank you very much.) I do not answer questions submitted in the comments section, as the questions are often very specific, and because people often give personal information that shouldn't be bandied about on the Internet. I usually respond within 24 hours--sometimes within 15 minutes--but I'm sometimes busy, and oft-times lazy, so it may take me a couple of days.

Do you always know the answer?

No.

A Story from Tenants Together's Landlord Hall of Shame

2010-12-02T07:47:00.000-08:00

See the details here. And I'm having a terrible time deciding which of the worst landlords in California I should vote for. They're all such worthy candidates--exploiting immigrants, discriminating on the basis of race or national origin, violating tenants' rights laws, failing to maintain habitable units. See the nominees here. (You have to be a Tenants Together member to vote.)

Badly Behaved Banks

2010-11-19T11:55:00.000-08:00

You can read about it here and link to the report itself. The banks really are as badly behaved as you thought. And you aren't alone; they're misbehaving all over the country.

Peon Toots Own Horn

2010-10-28T15:16:00.000-07:00

See the links here. Unfortunately there's no video, except the one my husband made for me.

On TV

2010-07-13T11:48:00.000-07:00

Your blogger will be addressing the Sacramento City Council at 6:00 PM this evening. You can watch on Channel 14 if you're in the Sacramento area or look at the Sacramento City Council video archive. The video is here. Click on the July 13 video and then move to 6:47 PM.

You'll note the remarkable lack of interest on the part of the Councilmembers.

Tenants Together Issues New Report on Tenant Foreclosures

2010-07-01T20:45:00.000-07:00

Tenants Together has issued a new report on the impact of foreclosures on California's tenants. You can read it here.