Tenants Together, a statewide organization for renters’ rights in California, recently estimated that over 200,000 tenants were displaced by foreclosure last year in California alone[1]. Tenants were mostly displaced by single-family home foreclosures, reported the group, but multi-family building foreclosures are also on the rise according to the group.
Since most loan-modification programs target owner-occupied properties, it seems likely that this trend could continue. However, the federal government is attempting to at least provide tenants with some warning by increasing the eviction notice period for tenants. They now receive 90 days notice and existing leases may even survive foreclosure, with banks and lenders assuming the previous owner’s landlord responsibilities and obligations.
This seems to have the potential to create a number of unforeseen consequences as banks might avoid foreclosing on rented properties or be unable to accommodate the strain of abiding by current leases while attempting to recoup losses on the property.
Do you think that the current tenant protection laws are fair? How have they impacted you as an investor or a tenant? Do they go far enough?
Your comments and questions are welcomed below. Thank you for reading!
[1] http://www.dsnews.com/articles/index/state-group-estimates-37-of-california-foreclosures-involved-renters-2010-05-27
This happens in Florida as well. Tenants can receive a 90 day notice if certain conditions are met. First, they must have a valid lease and they are current on their rent. Second, if the new buyer is an investor or the lender the ninety days can be enforced. If the lease was executed before the NOD, there may be grounds for appeal to complete the lease. I haven’t seen this carried through yet. If the property is purchased by an owner occupant, the old rules apply and no 90 day overstay is required.
This does serve to protect the innocent tenant and I do see merit in this. The owner occupant is presumed to have had adequate notice so they are not granted the extension of time. Also, they have not been paying. Certainly, there are many times that the owner sees the initial Lis Pendens and doesn’t follow the case enough to be aware of the sale date. That is very common and though there are ten days between the sale date and any start of eviction, it still catches owners off guard.
Government messing with the free market system is what got us into this in the first place (pushing loans that lenders would not have made on their own). Now they have compounded the problem by messing with it further (bail outs, FNMA support and stupid mod guidelines). We have to deal with the situtation that is upon us, but please try to keep government out of business and into only infrastructure and defense.
Why not keep the government out of this, and let the market forces correct the situation?
I’m so glad you posted this topic.
I live in California and I’m going through that right now.
My wife and I currently lease a home in Lake view Terrance,Ca.
We’ve lived here for four years never missed a payment. We even entered into a contract with the owner for a lease purchase a little under two years ago. But for Reasons Far beyond our control. We are being forced to move in less then 20 days. I was completely blindsided by the whole situation. It has forced me into a complete stage of panic and a little rage just to think that good people who have been doing it the right way(atleast that’s what I’ve been told was the right way) are now being forced out their homes even when their paying their bills.
Personally I think they should invent a stimulus package for renters and leasors who have the ability to pay their bills but for some reason they couldn’t come up with the down payment to buy the house. The government should wave the down payment and set up a second mortgage on the property for a longer term then the note at a slightly lower rate then the rates of a personal loan. This would allow the Renters and leasor to qualify for the property that they currently rent or lease anyway.
We have a lot of options in our situation, none of them are able to help comfort my family from the lost they are feeling from the loose of their
home.
The worst thing of all I think was the Lender Rep aka the BROKER come over and offers me a few thousand dollars and 30 days to move. What type of offer is that? And here’s a better question how do I Get my money back from the lease option when the owner opted for a short sale that released her from the property and made it possible for her to just walk a way to save her credit so she could keep her home.
I think the whole process of Renter/landlord needs to be re-thought and re-a ranged.
I am a very active Real Estate Investor in Charleston,S.C. I just purchased a home at one of our Foreclosure sales,and it came with tenants.We had a hearing in front of a local judge.They handed him the tenants in foreclosure act,Even though they did not have a lease in place,and were on a month to month,he said under the new law he had to give them 90 days.I said I understand,however if you are giving me tenants for 90 days,I want a deposit to protect me,and fair market rent for the 90 days.He said the law did not mention rent.I appealed,and we have a new hearing to try and get rent,who knows where this is heading,be carefull if you buy one with tenants,you may have them for years if they have a lease in place.