The California Home Foreclosure Crisis Needs Action in 2008

I would like to know, what laws are currently in place for rental tenants currently living in homes, but owners are in foreclosures.
I am one of those tenants, and just found out that the auction date is January 22, 2008. My husband and I have 4 children and are not prepared yet to move.
Legally, how much time do we have (if we have any) after January 22.
I heard that, it takes about 2 weeks to record the purchase, even if it is the bank, then if a tenant they may allow 30 more days. But I have not been able to get that confirmed.
Please let me know.
Thanks.

What happened to individual responsibility and accountability?

If you live in a community in California with rent control and "just cause" eviction protections, it is less likely that the lender (who takes back the property in foreclosure) can evict you. Most just cause eviction laws in California do not permit eviction after foreclosure as a just cause for eviction. This MAY apply even if your unit is not subject to rent control, as many local ordinances protect tenants against no-cause eviction even when the law cannot protect the tenant from rent increases. (The Costa-Hawkins bill prohibited local rent control ordinances from protecting tenants in many condominiums and all single family homes, claiming that this would help to protect housing for families. How, I asked at the time. How, I still ask.)

In addition to eviction protections incorporated into rent control ordinances, some communities have just cause eviction protections absent any rent control legislation (most notably, San Diego). If you don't know whether you're protected, contact your local rent stabilization board. They can either figure it out for you or refer you to someone who can.

Unfortunately if you live in a small community with few tenants or in the Central Valley, you likely have no protection against eviction after foreclosure. Even if you have a lease, the lender need only serve you with a 30-days notice to quit in order to force you out. (Leases are most often voided by foreclosure.) It may be that the lender will have so many foreclosures that you'll be there for several months before receiving a notice. It's also possible that, as the number of foreclosures in some areas increase, lenders will want tenants to stay in the property, just so a few people remain on the block. But you cannot depend on that.

Some lenders are offering "cash for keys" if tenants agree to move within a couple of weeks. But the amount of cash being offered (lenders seem to treat tenants the same way the State Legislature does) is so small that it's not worth taking in most cases--you need the time more.

Again, if you're in a rent-controlled community, talk to your rent stabilization board right away. You may also need to have an attorney write a stern letter to the lender, as many lenders seem not to know (or to assume that tenants don't know)that foreclosure is not a "just cause" for eviction in California.

And it would be nice if the State Legislature did something about all this. Don't hold your breath.

I do not live in a rent conrolled area.

You said, "the lender need only serve you with a 30-days notice to quit in order to force you out."

At what stage in the process can the lender issue such a notice? After the sale? Before? As part of the notice of sale that's supposed to be posted on teh property 20 days prior to sale?

Thank you.

The lender has to own the building in order to evict you. That means that the 30-days notice would be served after the foreclosure auction fails to sell the building and the building reverts to the lender. It may take some time for busy lenders to get around to you, but in most cases the 30-days notice is all you get once they do get around to you.

My wife and I are in a similar situation. Our house in Solano County is in Foreclosure. It is at the trustee level as of December and should go to the trustee sale soon. We have been advised to "escrow" our rent by two sources, an eviction attorney and by the Housing Office at the Air Force Base that I am stationed at. We have been searching for a new place to live, but have been waiting for a "cash for keys" offer or just more information. We want to move now, but also want to make sure that we are covered legally and financially. Sadly, the base says that renters facing foreclosure, is increasing at an alarming rate in our area.

My situation is probably common but nerve-racking. I live in an upscale condo in Los Angeles with my family, and pay 3000 a month in rent. The landlord has recieved Notice of Default, and is currently listing the property as a "short sale". My concern is my deposit (3150.00). Am I just out of this money? He is collecting rent from me and not paying the mortgage, is that legal?

I guess I'm becoming the advice nurse on this issue, so I'll check back in every couple of days for questions. I'll also be putting something up that addresses these issues in more detail at some point. First, to Joseph. Putting the rent in escrow is a good idea, but not strictly necessary. Tenants who are unsure where the rent should go need only to have the money available. No Hawaii vacation, no Hummer. If you don't have a lease, there's no reason why you can't move now. You'd give up the "cash for keys," but might feel more secure. If you have an unexpired lease, your situation is more complicated, as I'm sure your lawyer explained to you.

To Clovis 911. If you stay until the foreclosure sale, there's some question as to whether the lender would have to give you back your deposit. That's because, unlike a regular sale, where the deposit is transferred to the new owner, a foreclosure voids the lease or rental agreement. If you leave before the foreclosure sale, you should recover your deposit from your present landlord. If the building is sold (even in a short sale), the deposit moves to the new landlord and, if you move, the new landlord should return your deposit. If the lender takes the building back, then you may end up having to sue your former landlord in Small Claims Court to recover the money.

Technically, the landlord is supposed to use the money to pay the mortgage, but only the lender would have cause to complain. It's unfair, to be sure, but you owe the money to the landlord, whether or not he pays the mortgage with it or buys himself another house.

And yes, your situation is nerve-racking. It would be wonderful if the government actually got round to putting out some useful information for tenants, but I don't expect to see that any time soon,

Sad to say - The mortgage company completed the foreclosure sale - there were no bids at the sale and now it is an REO.

What are our rights? Our interest was at 12% we asked the lender to restructure the loan and reduce the interest rate - to no avail. Now that the property is REO - they have offered a month to month lease agreement with the monthly lease amount the same as the proposed restructure agreement we presented.

Questions:
1. If we don't accept the lease agreement - How long before we must move?

2. What legal actions can be taken to increase our time to prepare for a move?

3. What type of documentation should we receive? We have received none except a call from a Property Management Group.

4. We live in a community with an HOA - According to the HOA renters/lease agreements are prohibitied - what legal recourse will they have when the mortgage company tries to rent out our house?

Allison,
Last weekend, there was a notice of trustee sale on the property we are renting. Your posts have been very helpful.
Can you refer me to a website or other resource that can explain foreclosure timeline from a tenant's point of view?

Let's see if I can post. First, if you don't have a lease, you can move whenever you want. Just give your landlord a 30-days notice, and move. Of course, if you want to stay around and see what happens...

Your security deposit must be returned to you, and the law is very clear that if the deposit isn't returned to you by the landlord who collected it, it is assumed to be transferred to your new landlord. If the lender takes the building, the lender must return your security deposit to you. Also Los Angeles has rent control and "just cause" eviction. Be sure that you check with the rent board to see if you're covered under the eviction protections. Foreclosure is NOT a just cause for eviction in LA.

I know very little about HOAs and won't even try to figure that one out. The only thing that occurs to me is that the lender wants you to stay in the hope of getting round the HOA provision against renting your house out. If you decide not to take the lease, the lender can serve you with a 3-days notice to quit (former owners only get three days, tenants get thirty days) and you MUST leave within the three days. The HOA, however, might come after the lender for renting the unit out--even to former owners--as it violates the HOA rules. But, as I said, HOAs are something I know nothing about.

Finally I have a piece on tenants and foreclosure on patrick.net. It answers the important questions.

Ah, Mr. Russo has fixed my problem. He does this website alone and I was having trouble getting my posts on. He took the time to fix the problem.

Alison,

I'm confused...I am a renter in Riverside County and have 'Notice of Default' dated 1/14/2008. The property owner has not made a payment on the mortgage since Sept 2007.

I am on Month to Month - No lease. How long do I continue to pay rent to the current owner?

Brad--

Here's what happens. Your landlord is in the process of foreclosure and the lender has registered her/his failure to pay on the mortgage. The next step is the "Notice of Trustee Sale," which should be posted somewhere on the building. This means that the lender is taking the building back. Generally these days the "sale" doesn't result in a sale to another party and the lender takes back the property.

If you're going to stay through the trustee sale, you must continue to pay rent to the current owner until the trustee sale, as the landlord still owns the building. And, yes, it is not fair that you have to pay money to a landlord who has put your home in jeopardy, but the State Legislature has insured that tenants are treated unfairly and there's nothing we can do about it.

If you find another place to move to, you can give your 30-days notice and move at any time. If you don't, the lender will probably send someone round to talk to you after the sale. At that point you can discuss your situation in as much detail as you want and determine what their plans are for the house. They may offer you "cash for keys" if you move within a few weeks, or it's possible that they'll want someone to stay and care for the house. I generally don't think a lawyer will do you much good, but if they do want you to stay, have a tenants' lawyer look over the agreement.

Remember that, if you are still there when the trustee sale takes place, the lender becomes responsible for the return of your security deposit, so any "cash for keys" offer you take should include the return of your deposit. And I cannot impress on you strongly enough that any agreement you make with the lender be IN WRITING. If you have to take the lender to court to get any money promised, you want a written agreement.

Our apartment we live in went into foreclosure. They had the Trustee sale already, and now the bank owns the property (apartment). What happens to our security deposit? Do we collect it from our previous landlord? That is a lot of money to just let go of.

Brooke--

I'm sorry not to respond sooner, but no one had written in since February, so I've slacked off. I am assuming that you are in California, and that your apartment is not covered under rent control laws. If you do live in a community with rent control, contact the Rent Board or a local tenants' organization for help pronto. In most California communities with rent control and just cause eviction, foreclosure is not a just cause and the lender cannot evict you. The lender may try to do so, so get local help.

If, however, you're not in a rent-controlled community, the lender and your landlord are both responsible for return of your security deposit. That means that if the lender evicts you, the lender must return the security deposit to you within the time allowed under the law. If the lender does not do so, you can sue both the lender and your former landlord in Small Claims Court and collect from either the lender or the landlord. (Hint: the lender is likely to be easier.)

Should the lender offer you "cash for keys," be sure that you add in the amount of your deposit. You don't want to sign anything unless it gives your deposit back as part of the deal.

Also my piece on tenants and foreclosure in California is published at tenantsforeclosure.blogspot.com. You can ask questions through the comments section there.

I am an older, now disabled woman. My home has been foreclosed upon by a hard money lender in company with my old attorney who wrote the note for me and my funder and had it 'sold' for collection to this man for no money. They did not fund the money to me so I could repair my home and rent the 2nd unit after a fire. Instead they held the funded money and not let me use it for 6 years (and still) and foreclosed. I have lived there 30 years and they have given me no time to move my things...though I had paid rent until May 30th, I was evicted by the hard money lender...(the new owner) a month early?
My home is very valuable and I owed very little.
My SSI does not give me enough to hire someone good enough to catch these guys I fear. The D.A. here says it is loan fraud and mal practice but no one will help me without upfront cash. I am now homeless after building my home and furnishing it myself these many years. They are getting ready to auction all my belongings (4bedroom 3000sq')after tricking me into leaving them on site when I was surprised by the eviction after paying rent.
I live in the Bay area... there is no one to help, though I have tried for months to gather money... most of it I left hidden in the home as I had only my car and 1 hours notice.
Do you know of anyone qualified to help me in this area who would take this type of a case and be capable of actually doing it?
I was hyped the last 2 months by a man who said he was working on the case but he was a fraud... a very capable fraud. I finally found out he was exonerated by the 9th Circuit Ct ... but was not ever an attorney. He took me into SF BK court and didn't go to the first hearing after months of talk.
Any ideas for me? My home is beautiful and these people are going to make a million dollars+ on it.
Someone should stop them... and I deserve better also.
Hope you read this, I am without other resources then the home I've spent my life building for my retirement and now old age...my body rather broken by the fire. I was just 62. I did the hard work, rebuilding it from its 1860 roots.
I will have to move into a homeless shelter soon and I am beginning to stop all my community work and associations as I cannot tell this story and remain a viable member of society.
I'd appreciate any referral or ideas... I will do my best to carry out any thought that might assist me in reclaiming what should be mine.
Thank you. Ellen

everyone should watch AB 2586 passing thru the senate right now ... it provides important laws
for the rights of foreclosed tenants

I need a lawyer to sue Countrywide for predatory lending. I am a disabled senior citizen, almost 62, and they I was defrauded by them, and now to be put on the street, they took my every cent. I put my life savings into this house. They left a note they now own it and I am being evicted. No one ever told me any dates about anything.

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