5 things renters need to know about eviction from foreclosed properties

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5 things renters need to know about eviction from foreclosed properties

1. The lease and tenancy take precedence.
The Protecting Tenants at Foreclosure Act of 2009 is a federal law that allows renters to remain in a foreclosed building for the duration of their lease. Tenants who have a month-to-month lease or who are under an oral agreement — so-called tenants at will — can stay at least 90 days from the date they receive a written eviction notice. Because this is a federal law, it applies to renters in every state, city and town.

The only exception is if the new owner plans to live in the unit himself before the lease or the 90-day period expires.

2. If someone official tells you otherwise, take a name.
While strict ethical codes govern what real-estate agents must disclose to buyers and sellers, the same principles do not seem to apply to what agents do, and do not, tell tenants, Preston says.

“There is a widespread violation of tenant rights by agents of banks after foreclosure, and some of the worst violators are the real-estate agents,” he says.

Agents will request to show the unit multiple times a day, or dozens of times in a week. Some have posted notices falsely proclaiming that an eviction proceeding has begun, even though none has. Many aggressively push cash-for-keys programs that are not a good deal for the tenant.

Tenants, after all, are not their clients, and agents are essentially rewarded for clearing a property quickly. If you think you have been provided misleading or erroneous information, report the incident to the state’s department of housing or the local real-estate association.

3. Get it in writing.
“A lot of these tactics that are used to deceive tenants are done verbally,” Preston says. That’s intentional. Agents don’t want to get in trouble.

“Tenants can make a lot of these verbal harassments go away just by demanding everything in writing.”

So if someone is at your door, simply tell that agent: I don’t wish to discuss my tenancy any further. Please put it in writing.

4. Cash for keys is only a request.
The tactic currently in favor is to offer tenants — many of whom aren’t aware they can even stay through their lease or 90 days — cash to leave quickly. This may be a good option for some tenants, but often it is not.

Typically, the tenant receives the cash only after handing over the keys, far too late to use as a deposit on another apartment. Often the amount is less than the security deposit, which the tenant might lose. Worst of all, many tenants grab the cash unaware that they could have stayed in the apartment longer, giving them more time to find a new home.

Preston’s advice: Always seek help from a local tenant advocate in the case of an eviction.

If you do accept cash for keys, ask for a good portion of the money upfront.

5. State and local laws may offer additional protection.
A small but growing number of localities are passing just-cause eviction laws that exclude foreclosure. There are state laws in Massachusetts and New Jersey.

What this means is that landlords can never evict tenants without cause, and foreclosure is not considered a cause.

Do I still have to pay the rent?
One of our readers asked a common question: If the landlord is delinquent, where do I send the rent? Should I even pay the rent?

It’s a good question. We’ve all heard stories about landlords who, headed toward foreclosure, have decided to pocket the rent money. It’s also true that many such properties have already been neglected. Being told to pay anyway is a tough pill to swallow. Besides, if you have to move and the landlord is bust, isn’t there a good chance you’ve already lost your security deposit?

So, here’s the key question: Do you want to stay in the unit? If the answer is yes, then you need to do two things, says Janet Portman, a housing lawyer with Nolo, a legal information service.

1. Pay the rent. On time and in full. You don’t want to give new owners any ammunition against you.

2. Confirm the identity of the current owner, and pay that owner. Document everything in writing.

In buildings with one to four rental units, lenders are permitted by law — except in Michigan — to collect the rent directly from tenants once the owner has defaulted. In that case, the tenant will be notified of the change in writing. To guard against scams, confirm the address of the lender before mailing the rent check and make copies for your own records.

If you don’t receive such a letter, there are other ways to find out who owns the mortgage. The information may be on your lease, and will definitely be in county records, available either online or in person.

Contact the lender, then follow up with a “letter of understanding,” Portman says. In it, reiterate the conversation, including the statement, “It is my understanding that you want me to send the rent money to X address. If this is incorrect, notify me immediately.” Make a copy and, if possible, send it certified mail so you’ll have a return receipt.

“If they tell you, ‘Go ahead and keep paying the landlord,’ then you write them” another letter of understanding, Portman says. “Whatever they tell you, you send a letter confirming that, because it protects you.

“Remember, if you’ve got a lease, you can stay, but not if you haven’t paid the rent,” she adds.

Situations can get confusing, but renters who keep a record that they have paid someone, even the delinquent owner, should be protected from eviction.

As always, seek advice from a local tenants group. Tenants Together, which serves all of California, has counseled more than 5,000 tenants in foreclosure and set up a special foreclosure hot line.

 

6 Responses

  1. @hman,

    Reading your post, I could feel the blood boiling in my veins. I hope you sued or are considering suing Aurora and I hope you’ve called everyone’s attention to that “upwards” modification. E.Toile mentioned a few weeks back that it was widespread and, quite frankly, I doubted his word (sorry E. Toile… with the amount of BS on this site, I carefully consider everything everyone writes here before believing it).

    I would have gotten everyone to intervene: the AG, Obama, HUD, BBB, absolutely everyone! And now, I would go back to get my money and/or property back. Un-be-lie-va-ble!!!

  2. This article is incorrect. In GA, regardless of how many months are left on the lease, tenants have 90 days to find another place to live and may not stay past that. We see piles of belongings thrown to the curb, and the tenants sitting among their things, keeping thieves away because of this awful situation.
    Things are very wrong in this country. Criminals and thieves run the place. Until we take down the Federal Reserve and remove money from politics, we will continue to have no control over our own lives.

  3. This is interesting.

    I had a rental property with Aurora. After subsidising the payment out of my own pocket I tried to do a modification. I was honest with my tenants before I renewed their lease and made them aware that I was going to be attempting to modify the loan.

    I was advised by Aurora I would not qualify unless I was at least 60 days behind. So I stopped paying. After losing my paperwork numerous times I got an answer back after a year. I was approved for the modification but the payment was higher than before. Seriously that was my option. They said my financials support the decission.

    I called Aurora to tell them I could not accept their offer. I asked them what would happen to my tenants who had 10 months left on their lease. They told me that I was in breach of contract with them at the time I renewed my tenants lease therefore they did not have to honor the lease.

    I had paid all of my property, insurance, and HOA fee’s during the mod process. I’d like to make people aware of my experience. Ask your landlord if they’re current.

    Good Luck Everyone

  4. […] Continue Reading: 5 things renters need to know about eviction from foreclosed properties […]

  5. I’ll have a lot to say on this topic in upcoming writings on my own website. What was not said and the misleading information in this article is staggering in reality.

    If you’ve tried to rent recently you know what I’m talking about. If not, wait until you read what is going on in that arena…it never ends with the crooks being spewed out from under the pile of rocks that is foreclosure fraud.

  6. Before renting a house or unit make sure you do a background check and check county auditors records on the owner of the said property.Ask for 3current personal refrences and three credit refrences just as the owner asks of you.Remember this is a business arrangement and you don’t know this person from Adam and Eve.This will give you a much better idea of who and what is current or not.It may not make you popular but you will be taking less risk.

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