Foreclosures have become a raging fire, destroying whole communities in their wake. Tenants of foreclosed buildings often times have the least control over their situation. Here is a look at some rights that tenants do have during a foreclosure, and why we need to step even beyond these.
Take Back the Land is really united in two strategies that are intended to compliment each other: liberate empty bank owned homes and to defend families going through foreclosure. This type of foreclosure defense is not unique and is happening in organizations and coalitions around the country, from long standing community groups like City Life / Vida Urbana to the more recent Occupy Our Homes phenomenon. The execution of foreclosure defense is done along a course of research, and the beginning includes identifying homes that are in foreclosure or pre-foreclosure. This means checking city and county records and locating houses where the process has already begun. From here people will go about contacting the people currently living in those houses, often by arranging targeted canvassing to see if those people would like to resist their foreclosure and support their neighbors.
For anyone that has engaged in one of these canvassing attempts they will tell you that in many neighborhoods you will not be talking to homeowners, but instead tenants who are renting. Many of these people may be living month to month; relying on the agreements or leases they actually have with their landlord. If their landlord is going through foreclosure, either with a house or a larger apartment complex, there is often a lack of communication about the actual legal status of the property. Increasingly we find people who had no idea that they property owner was going through foreclosure, and we are the first to break the news. As the financial crisis persists, and the patterns of predatory housing policy both by the banks and many who are making their money from rents, many people simply allow their buildings to be taken through unpaid mortgages and keep collecting the rent every month until the building is seized. This will usually give the tenants few options except to leave since the process has completed by the time they are made aware of it.
The option to resist the eviction is still important and relevant, but what rights do people have as tenants already? The first thing to know is that you do not automatically need to leave, which is also true for an owner who first gets the request to vacate. A foreclosure is a civil suite where by one party, in this case the bank, takes possession of the property because of an outstanding loan. The new owner is legally required to at least give you a ninety-day notice to vacate cannot order you out immediately. A sixty-day notice is all that is required if the foreclosure took place before May 20th, 2009. This base line may be extended if there is a lease in place because the new owner may be compelled to allow you to finish out your lease. There have been some cases where a friendly owner will let the person know that they are in foreclosure, and then sign them a multi-year lease so that they can present an argument to stay for an extended period of time. This is the most important part of maintaining rights as a tenant, and the agreed upon rent cannot be substantially below market value. There needs to be a hard and fast agreement in place, usually before the landlord goes into the foreclosure process. This is actually why leases can often be of an advantage to a renter, though they are still not practical for everyone's situation.
There is nothing saying that the bank will follow these laws without holding them to task, which is usually true of commercial institutions. You will then need to send them a letter that lets them know your rights and intention, which you should also keep a copy of. A good option is to send the letter with an option to force the recipient to sign for it so that you can verify that they received it. Since it is a bank it will have a whole process for receiving these types of communication, and so you can be sure that is not simply going to be discarded. The most important part of this letter is that you will offer to continue paying your same rent to the new owner, which is to really say that you do not intend to squat. You may want to continue in the house without paying the bank and you can continue to do this by resisting eviction in the more conventional sense, but you could also make claims about paying the rent while continuing to pay nothing. If you do not pay anything they will likely order you to shell out the money or leave, given that they have not tried to get a court ordered eviction already.
You cannot necessarily rely on your lease if you want to stay in there, though this is a first step. If the new owner plans on living there, such as if they purchased the house from a bank option, then the ninety-day notice will likely stand. If you do not pay the rent on your lease they can also get an eviction ordered, but this is relatively standard. If the tenant is forced out by the new landlord then they may have a right to sue the old landlord in small claims court for violating the lease agreement. Single family homes are the most vulnerable in these situations because the new owner can easily make the case that they will be living there, which is not usually a case that can be made for an apartment building.
If the new owner does not want to be a landlord they may simply ignore the repairs that need to be done and their essential duties as a landlord, though this is illegal. They do have a stake in often allowing the person to stay in the house because an empty house on a block will enter disrepair, have the copper plumbing stripped, and usually bring down the value of other houses. This logic is not usually in place with the banks and is more apt if it has been sold at auction or closely managed by a property management company, but there is no telling exactly what the process will be. In reality, tenants are forced into a "wait and see" situation where they have to simply see what the choice of the landlord is. What is worse, however, is if the tenant never becomes aware that the property has changed hands and still sends rent into the old landlord.
The new landlord may even offer a Cash for Keys program, which is essentially paying them to leave. This is commonly done in foreclosure to the owners so that they will leave the house without resistance and keep the place in good condition. In practical terms, this is a bribe to keep the residents quite and moving as quickly as possible.
The most important thing is to respond to the eviction order if the bank gets one, especially if they did not follow the appropriate restrictions. You will want to give an answer to the owner that sites the Protecting Tenants at Foreclosure Act, Pub. L No 111-22, 702. The court will set a trial date that you will need to attend and you will need to bring with you the letter you sent to them, which you got a receipt for so that you can verify both the date and that they received it. Bring a copy of the Protecting Tenants at Foreclosure Act to prove to the judge that you are in compliance with the laws as written. You will need to bring in a copy of your lease to show that you are simply living out the agreement that was set before the new owner took possession. If you are in Section 8 the process should go ahead similarly and your regular assistance will continue, and foreclosure is not recognized as a reason to end the lease agreement. The same is usually true of rent controlled apartments.
It is important to note that the laws very state by state and many of these are not hard and fast laws, as a bank or landlord usually has the money to fight claims while the tenants does not. These should be a guidepost to consider what is required, but the fine details have to be researched in a given situation.
These rights are really minor in comparison to the bank’s ability to try and order a tenant to leave, so it is up to them on how to deal with it. The bank may choose to try and fight this, or find ways to terminate your lease and order an eviction for other reasons. It is in these situations that a list of simple rights is not really going to protect you since they have most the power in a property relationship. It is here that community partnering and solidarity are going to be crucial. This means tying in with neighbors who may be going through similar situations, working with community groups that support you in resisting eviction, and showing the bank that you do not intend to be a passive victim. The banks, and most landlords, operate purely with profit in mind, and an eviction of a person who intends on resisting with the support of the community is risky for returns. It is this community power that creates a force that can challenge these power structures. Knowing your rights can be an important first step, but it is only a small piece that needs to be coupled with the organized resistance that arrives by banding together.
Tenant rights are something bestowed on people by the state, and because of this position are not actually empowered with the ability to challenge the powers of these institutions. You cannot expect them to be the ammo to change the dynamic of the power relationship between the two parties, so they are limited even in the most basic of situations. They can, however, be a leverage point by which you can create pressure to win real gains.