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 Californiawere 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
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
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
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 at (888) 495-8020. If you think your rights have
been violated, call the Attorney Generalís Public Inquiry Unit at (916)
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