The foreclosure process for many houses is dragging down to a slow crawl. Lenders are buried, short sales could be in the works, and the free-loading homeowners have no incentive to cooperate.
But once the lenders finally complete the trustee sale, they’re not done.
They have to get the occupants to leave.
Tenants now get 90 days to vacate – from B of A’s Tenant Assistance Flyer:
The “Protecting Tenants at Foreclosure Act of 2009” took effect May 19, 2009 and applies to properties with a foreclosure date of May 20, 2009 or after. This new bill requires 90 days notice to vacate or notice to quit, depending on the state guideline requirements for tenant occupied properties. Should the tenants produce a bona fide lease, then the terms of the lease will be honored. A bona fide lease must be at arms length, the tenant cannot be the prior mortgagor, spouse or child of the mortgagor, the lease must have been executed before the notice of foreclosure, and the lease must be fair market rent for the area.
Doesn’t that sound like they just got into the landlord/property management business? Not only will tenants get an automatic 90 days to vacate, if they have a lease that goes longer, it sounds like they can stay, as agreed.
Geez, talk about unintended consequences. Something like this was discussed last year on CR, and Rob dutifully noted how every homedebtor’s brother would suddenly have a dirt-cheap long-term lease on a McMansion.
Scumbags at B of A threatening 1099s in order to scare people into keeping paying on underwater mortages.
What, they never heard of the Mortgage Forgiveness Debt Relief Act of 2007?
A lot of long term lease tenants are praying their landlord/owner of the property is foreclosed upon.
Well I think this is good. No it’s not good for freeloaders. It’s good for honest and very surprised renters who come home and find the law at their door.
They entered in with good faith, and should be allowed room to breathe while capitalism works out its destruction.
Lesson to renters: insist on Landlord providing a current Preliminary Title Report, to be paid for by Landlord, as a condition/subject to, before signing a lease or month-to-month rental agreement. My friend’s daughter got caught in this mess.
Okay, just find another deadbeat in trouble and trade places. Become each others landlord at “market rent”. Save on moving costs!
If you buy a house and it goes up in value, pocket the profits. If it goes down, rent it for “market rent”. Want a spending spree? Your house comes with an ATM!
How much can this can kicking go before we run out of road?
This is only fair, IMHO. It’s not the tenant’s fault that the landlord didn’t make his house payment.
Jim, I am in my second rental which is being foreclosed upon against my deadbeat landlords.
In the first case, I rented a house for $1800 monthly. My landlord quit paying his mortgage on that property in December 2007, and in May 2008 I was served with papers from the County Sheriff saying the property was being foreclosed upon.
The sheriff did tell me that we could take our time moving as the county court house was so swamped with foreclosures it would take 6 months to get around to taking the property away from my landlord.
In the latest go round, my lease actually ends today for a $1600 a month condo. However, a little over one month ago we were served with papers from the Sheriff’s department saying our landlord was being foreclosed upon. This current landlord has not made a mortgage payment since December 2008.
Now although my lease is up, we are not moving. We are having our landlord draw up a new lease, month to month. Then when he loses this place we’ll have 90 days to move at our own discretion. Which is sweet because it gives us time to really look over rental deals everywhere.
I’ve never been late on rent in my life. I’ve never owned a house. I’ve never tried to “game” the system.
The new law signed on May 20 states a renter can stay in place at a foreclosed upon home 90 days after the bank gets it back (if a month to month lease), or can stay in there until his/her lease would have expired (for a yearly lease). We will simply change our payments of rents to the bank instead of our old landlord.
With a 90 day time period, we can breathe easy.
Both of these landlords who were foreclosed upon took my rent money and didn’t pay a dime to their contractural obligations. Both of them are ex-Realtor who played the Real Estate Magnate game and lost. They both are belly up with destroyed credit.
Meanwhile, we’re (my girlfriend) looking over other units in this same building where rents are falling as fast as the sales prices of the REOs and short sales. One other thing we’ve started doing is taking reductions in home/condo prices and adding them to an Excel spreadsheet. It is amazing how much is hidden from us outside the Real Estate cartel’s full blown version of their MLS vs. the online MLS the Realtors put up on their website.
So, I am watching list price reduction after list price reductions and keeping a solid data base on my Excel spreadsheet showing the trail of panic, while the mls databases for public consumption show only the latest listing price and the latest “original” price. (I’ve already caught numerous sellers and Realtors ripping old listings off the market, then re-listing a few weeks later with a new “improved” lower “original” price. Indeed, my first landlord who was foreclosed upon started in 2005 trying to sell the compound I lived in for $7 million. When I moved in back in Sep. 2006, he was already had dropped it to $3.9 million. He soon ripped it off the market, came back on the market a few weeks later and showed a new “original” price of $2,950,000. He lost the place in foreclosure for only $1,295,000.)
Anyway, here’s the first link which tipped me off to the new “Renter’s Rights”:
http://www.sacbee.com/736/story/1920860.html
Scroll to the bottom where it says the following:
Thousands of Sacramento-area renters can count on new protections when a landlord loses the house to foreclosure.
Gone is the 30-day notice to get out when the bank or a new buyer takes the house. That standard has sent countless capital-area renters packing fast the past two years amid nearly 40,000 foreclosures. A new law signed by President Barack Obama is more generous:
• Renters with leases can stay until their leases expire.
• Renters with month-to-month arrangements get 90 days’ notice.
The provisions are in the Helping Families Save Their Homes Act signed May 20.
The banks are getting exactly what they deserve.
Since we couldn’t get prosecution from the criminal Bush Administration, and we’ve so far had little action from the too soft Obama Administration, the “underwater/foreclosed squatters” may be the only way to teach the evil bankers a lesson.
And yes, the bankers are evil:
http://www.nytimes.com/2009/06/30/business/30banker.html?_r=1&partner=rss&emc=rss
What if there is an actual owner occupied property and not a rental? How long does it take to get the homeowner out after a trustees sale?What is the process?How long can they stay?Do they go through a regular eviction as it was a tenant?
Having a lease is not a bad thing!
Unlike a mortgage if a renter doesn’t pay the rent you can kick them out in 30 days. LEGALLY!
shadash-I believe it’s 60 days now before you can evict a tenant.
The program seems appropriate. If someone is going to “game” this program then they are just a criminal and will “game” any system.
More info on evictions…
http://www.expressevictions.com/flowchart.php
http://www.expressevictions.com/california-eviction-notices.php
60 days if month to month and living in a property over a year.
30 days if in a lease or month to month under a year.
But realistically even through 30 days would be correct it’ll probably end up 60 with delays and scheduling the sheriff to come out and evict the deadbeats.
Honoring leases makes good sense. If you want to talk old common law, a lease is valid for the term, and subsequent rights (owner, bank, subsequent tenants, etc.) have to wait. That’s not the actual law today, but I’m pointing out that it has a basis in reality.
As for the guy above who claims BofA is threatening to 1099 you, contact a tax lawyer. Residential property is generally exempt from capital gains. If they are threatening to ignore the law just to screw you, you might want to threaten back.
Thomas Franklin,
I have good news for you and bad news. The good news is that if you have a month to month lease you don’t have to pay rent. The bad news is that you will be hounded to hell by a real estate agent trying to dupe you into a cash for keys program.
Our landlord stop paying 6 Dec 08. NTS in Mar 09. We went to three trustee sales at the county courthouse and it finally sold, one month after our landlord claimed bankruptcy to get one more rent payment from us, on Jun 4th, 2009.
A couple of days later a real estate agent harassed me and my family to the point of me seeing an attorney four times and it got to the point that I was going to file a restraining order. You see we knew about the new law and wanted time to move. This agent wanted us to take the cash for keys offer for $1,000. In short it was hell, but we wanted the time to move because I view that as only fair b/c we didn’t know when the house would actually be sold.
So in conclusion know your rights…be prepared to ignore a real estate agent…force the paperwork. The letter you reference above didn’t show up on our door for two weeks after our Thunderdome cage match!
Robert/whomever- If a real estate agent harasses and hopefully before the point of a TRO. Call his/her broker or office manager, it would probably be the quickest way to get them to back down. Their broker is ultimately liable for their actions. The CA dept of Real Estate lists whom an agent is employed by (broker of record). This info can be obtained in a couple of minutes. I believe Jim has a link to the DRE web site, if not google CA dept of RE and look for agent license status, it will have a link to their employing office information. Sorry to hear about this bad apple.
Mr. Franklin,
Seems to me you’ve just established a very good reason to buy vs. rent.
This happened to me in the spring of ’07. I rented a large, newer beach condo with an ocean view on Neptune in Oceanside for $1700/mo. A price that was almost to good to be true. Turns out it was. About 2 months in, I got some NOD paperwork taped on the front door. I called the owner and she said to ignore it, that they were working it out with the bank. Hmm, not very reassuring. Then I got more papers, a ‘Notice to quit’ I think. So I did a bunch of research on tenants rights and decided to stop paying the owner and tried to contact the REO agent to work something out. They weren’t interested, they said I needed to leave. So I ended up staying for a couple more months rent free before I got some papers from the Sheriff, so I decided to get out before I got legally involved, or locked out.
I personally don’t think the owner was even paying on the place when I moved in. I looked it up and that’s called ‘rent skimming’ and it’s illegal.
oh but the story has a happy ending, I ended up moving one block over, on the Strand in a better place where I stayed for 2 years until just recently, because I bought a short sale house in east oceanside.
It’s a great place which is up for rent again if any of you bearish renters want to live on the beach for a while:
http://propadvantage.com/PropertyAdvantage-ListingsDet.php?propID=00573
I wonder if this law applies to “owner occupied” (wink wink) which is now renting out. And what about the fact that the landlord is collecting rent, but not paying his mortgage at all and could? If the lease shows the renter has been paying for months before foreclosure and the bank got none of it, this is pretty much evidence for the courts in writing.
It is my understanding that the IRS requires a lender will issue a 1099 (for the amount of debt relief) on NON-OWNER occupied property short sales. Primary residence owner occupied are exempt.
It seems like every property is owner occupied, at least on paper. Nobody checks and I see nothing buy advantages by claiming so.
The renter must pay during the 90 days, so this doesn’t seem unreasonable.
If they don’t pay then you can evict in 30-60, and the renters credit report will get dinged.
This does not seem so bad.