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Some advice for renters

by Jennifer DaviesThe San Diego Union Tribune
July 5th, 2010

Youíve been paying your rent dutifully month after month and even started a little garden in the backyard. Now, thereís a notice on the front door saying your place is in foreclosure. Even though youíre a renter, youíve now been unwittingly pulled into the housing crisis.

Itís hardly a unique scenario.

In 2009, around 37 percent of all foreclosures in California were rental properties affecting more than 200,000 people, according to Tenants Together, a rentersí rights group.

In San Diego, 40 percent of the 16,000 foreclosed residential properties last year were rental units, which included single-family homes and apartments.

Unlike homeowners who can plan and prepare for a foreclosure, tenants can be caught unaware. Often the first sign is anything wrong is a notice of trusteeís sale on their front door, which means a foreclosure sale can happen in as soon as 20 days.

Still, renters do have rights. Here are answers to some commonly asked questions about what foreclosure can mean for renters:

Question: Is there a way to figure out if the place youíre renting is on the road to foreclosure?

Answer: Yes, but youíre going to need to dig a little. First off, be wary if the lease you are signing is too good to be true, cautioned Steven Kellman, founder of Tenants Legal Center in San Diego. A home or apartment offered for below the market rate or a deal that requires several months of rent upfront are clues that things might not be on the up-and-up.

You might also want to check if there is a notice of default on the property. Simply go to the uniontrib.com/defaultfinder and type in your landlordís name. If you see a notice of default, run, donít walk, away. Once you are in a property, itís a good idea to run the same type of check every couple of months to avoid any unwelcome surprises, Kellman said.

Question: What exactly is a notice of default?

Answer: That is typically the first step in a foreclosure proceeding. It basically means that the property owner hasnít been making his or her mortgage payments and that foreclosure could be in the offing.

Question: So if there is a notice of default, should I stop paying rent? Should I pack my bags? What?

Answer: While a notice of default can lead to a foreclosure, itís not necessarily a foregone conclusion. Still, it can be an unsettling time for a tenant because there is so much uncertainty. The property can be sold in 20 days or the process can drag on for months. While one landlord might just walk away from the property and stop any repairs or upkeep, another might be madly trying to get a loan modification, Kellman said. He recommends continuing to pay your landlord until the property is officially foreclosed upon. According to Tenants Together, if the new owner intends to maintain the tenancy, that person must show proof of ownership and instruct tenants how to pay rent within 15 days after the ownership change.

Question: OK, my rental was sold as a foreclosure? Do I have to move out immediately?

Answer: No. Once the new owner, which in many cases is a financial institution, takes over, you can be evicted, but you still have some time. If you are on a month-to-month lease and you receive an eviction notice, you have 90 days until you have to move out.

If you have a lease, you can demand to stay in the property until the lease expires. The only exception to that is if the new owners of a single-family home plan to move in themselves.

Another thing to consider, San Diego is one of 16 cities that have a just-cause eviction ordinance, which means a landlord must have a specific reason for evicting a tenant. Foreclosure typically isnít considered a legitimate reason to evict, said Gabe Treves, the program coordinator of Tenants Together. San Diegoís just-cause ordinance, however, only applies to those who have been renting a property for two years or more.

Question: Iíve heard about other renters being offered cash to move out. Should I take the money and run?

Answer: It all depends on your circumstances, said Kellman. If youíre a single person and getting a new place is no big deal, then getting some cash to help with the move might not be a bad idea.

If you have kids and moving would cause a huge disruption in all of your lives, then you can decline the offer. Sometimes if you say no, the bank or its agent might sweeten the pot. The amount of money offered can range from $500 to $5,000.

Whatever you decide, you need to be careful about what you are made to sign, Kellman said. Make sure the agreement doesnít have any loopholes.

Question: What kind of loopholes should I be looking for?

Answer: You donít want to sign away rights to sue the previous owner for rent you may have already paid, so look for a line that releases other parties from additional claims.

Also an agreement that says the property must be left in an acceptable condition is setting you up for hassles, Kellman said. What is considered acceptable is subjective, so the new owner could withhold the agreed upon cash and create problems for you all while youíre in the process of moving.

Question: Thereís a real estate agent for the bank who is being super aggressive about getting me to move out? Can I tell her to buzz off?

Answer: Basically, yes. According to the Attorney Generalís Office, renters can require banks and their agents put all communication in writing. Also, improper entry into a personís home, shutting off utilities, changing the locks without a court order or any other form of harassment is illegal.

If you are looking for further help, you can call Tenants Togetherís foreclosure hot line. If you think your rights have been violated, call the Attorney Generalís Public Inquiry Unit at (916) 322-3360.

FAIR USE NOTICE. This document may contain copyrighted material the use of which may not have been specifically authorized by the copyright owner. Tenants Together is making this article available on our website in an effort to advance the understanding of tenant rights issues in California. We believe that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.

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