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THE BANK CHANGED THE LOCKS!

By Richard Zaretsky

Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

May 04, 2008 06:25 AM

There is discussion on Active Rain from time to time on whether in a short sale it is advisable to move out of the house.

The real issue is the clause in the mortgage that says the bank can change the locks on the house if it is "abandoned". The exact phrase from the Fannie Mae Single Family mortgage form says,

9. Protection of Lender's Interest in the Property and Rights Under this Security Instrument. If (a) Borrower fails to perform the covenants and agreements contained in this Security Instrument, (b) there is a legal proceeding that might significantly affect Lender's interest in the Property and/or rights under this Security Instrument (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture, for enforcement of a lien which may attain priority over this Security Instrument or to enforce laws or regulations), or (c) Borrower has abandoned the Property, then Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property. Lender's actions can include, but are not limited to: (a) paying any sums secured by a lien which has priority over this Security Instrument; (b) appearing in court; and (c) paying reasonable attorneys' fees to protect its interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy proceeding. Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 9, Lender does not have to do so and is not under any duty or obligation to do so. It is agreed that Lender incurs no liability for not taking any or all actions authorized under this Section 9.

My office has had only one experience on the changing of locks - and it was before the lender foreclosed and to change the locks the lender sawed off the realtor's lock box!

Frankly, the most liberal reading in favor of the banks would allow the bank to change the locks and shut off the utilities even while the borrower was in the house. I think there is no chance of that occurring - at least if it did the judge would be real upset with the lender.

As protection from this clause causing the remote chance of a change of locks, the best practice is to have a tenant in a vacant residence being (or planned to be) negotiated for short sale. I also advise my clients to continue to pay HOA or Condo fees, as those liens can have an adverse affect upon the lien of the lender (see subparagraph (a) above).

Let me know of your client's experiences with this issue!

UPDATE - THE SOLUTION TO THIS MATTER IS TO CALL THE LENDER AND LET THEM KNOW THE HOME IS NOT ABANDONED AND YOU HAVE AN ACTIVE LISTING AND ARE CARING FOR THE PROPERTY AND SHOWING THE PROPERTY. THEY WILL EITHER GIVE YOU THE CODE FOR THEIR LOCK BOX OR SEND YOU THE KEY TO THE NEW LOCK.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@FLORIDA-COUNSEL.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com

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Tchaka Owen

Galleria International Realty - Hollywood, FL

Richard, we had a listing that was in foreclosure and one day I stopped by to check on it and the lock on the back door (to the yard) had been drilled out and there was a manual lockbox on it. So I picked it and put the lockbox inside the door. A week or two later I checked on the home and there it was on the outside again. So I picked it again, locked the back door and kept the lockbox. As far as I'm concerned, that was B&E on their part.

May 11, 2008 12:25 PM

Anonymous

Tenant that lives in a preforeclosure home

Today, someone knocked on the door stating that the house had been foreclosed and that they were there to change the locks. We've been living here since Oct 07 and have been in contact with the owner of the home and we know that they are selling to one of their friends so we can rent from their friend.The owners had no idea that the bank sent someone out here to change the locks. Is the bank required to give some form of notice to the tenants?

Jun 20, 2008 05:25 PM

Tchaka Owen

Galleria International Realty - Hollywood, FL

The bank may change the locks once they own the home. I know of instances where a bank will do that if they think the home has been abandoned and they want to protect it from vandals. However, it's not appropriate (i'm not sure even legal) to do so if you're living in there and they're aware that the owner has not abandoned it.

Jun 21, 2008 02:55 AM

Anonymous

Richardo Sanchez

I was looking on a list of preforeclosure homes and I saw my landlord name. She has not said anything to us. I have a family of seven five childrens and my wife and I. Is the end of Spetember and starting another month. I am the only provider in my home. Please help! I don't even know if to paid the rent.

Sep 30, 2008 07:29 AM

#11

Anonymous

Richardo Sanchez

Sep 30, 2008 07:29 AM

#12

Anonymous

Richardo Sanchez

Sep 30, 2008 07:29 AM

#13

Anonymous

Richardo Sanchez

Sep 30, 2008 07:30 AM

#14

Tchaka Owen

Galleria International Realty - Hollywood, FL

1. Pay the rent - you are under contract to do so, therefore don't stop.

2. Contact your landlord and ask what's going on.

3. Start looking for a new place in the event that things go bad.

Keep in mind that if you do what you're supposed to do, it is possible to have a judge rule in your favor and the next owner of the home will be required to honor your lease. I'm not a RE attorney so please consult with one for verification.

Sep 30, 2008 07:35 AM

Anonymous

Iam living in a home for preforeclosure. I have a family of seven five children and husband and I.

My landlord has not said a word about the house on preforeclouser. How do I know that the house is for preforeclousre becuase I saw at the preforeclosure.com . What should I do?

Funny that you mention contract. She never did a contract with us. She just took the deposit and gaves the keys.

Now that I stop and think she was so will to rented to section 8 she thought that since we have five children's. We were on section 8. We are not on section eight.

Sep 30, 2008 07:44 AM

#16

Anonymous

yvonne sanchez

Iam living in a home for preforeclosure. I have a family of seven five children and husband and I. My landlord has not said a word about the house on preforeclouser. How do I now that the house is for perforeclosuer because I say at the preforeclosure.com. What i do?

Funny that you mention contract. She never did a contract with us. She just took the deposit and gaves the keys.

Sep 30, 2008 08:01 AM

#17

David Saks

Memphis, TN

Broker / Industry Analyst

Nice post, Richard. I suppose things could get rough for the occupant. Haven't spoken with the Lansky's in a few weeks, although the last time I spoke with Bernard's son I mentioned our correspondence. Joyce Lansky turned 80 recently. Hope your having a fine week.

Sep 30, 2008 08:37 AM

Richard Zaretsky

THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL

Florida Real Estate Attorney

Ricardo and Yvonne -

Tchaka has some good advice, but let me get more specific since you gave me more information:

1. You don't have anything but a month to month lease. In most states a month to month lease is cancelable by either the landlord or the tenant on two week's notice, and that notice ususally have to be given to the other party at least 2 weeks before the next rent is due.

2. Since you seem to be on a month to month lease, you are in a pretty good position. By this I mean that you can leave when it is convenient for YOU, by giving the necessary notice (which must be in writing to the Landlord). If you had a lease for a longer period of time (like a year) then YOU could not terminate the lease, even if the house were in foreclosure.

3. The house foreclosure could take many months - maybe close to a year! As long as you pay the rent the Landlord cannot kick you out - unless the Landlord gives you notice (with the required pre-notice as above). Even after the forelcosure the buyer at the sale - usually the bank, may want you to stay in the house, if you have kept it in good condition and could even lower the rent to keep you there! They need someone to take care of the house and if you have a good history of doing so, they may like the lease to temporarily continue. On the other hand, they may want you out of the house. This can become sticky as they can have a Sheriff order you out of the house, or they may make a deal to have you vacate in an orderly fashion, which we have found is usually the case.

4. I don't think the court will order that you can stay in the house past the foreclosure, especially since you have no written lease.

5. If you paid a security deposit, this could be a big problem for you as the Landlord is going to be a problem for return of that money. You may want to seek professional help on how to at least get the benefit of that security deposit if you cannot or expect you will not get it returned (assuming you are entitled to its return).

I hope this helps!

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@FLORIDA-COUNSEL.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com

Sep 30, 2008 10:17 AM

Richard Zaretsky

THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL

Florida Real Estate Attorney

Hi David -

A Sweet and Healthy New Year to you!

Sep 30, 2008 10:17 AM

Anonymous

Lance

My house is in preforclosure. I notified the servicer that i had moved but that the property was bieng maintained and protected with an alarm system.I received responses to both letters from the servicer acknowledging the correspondence. I also have a yard man and a friend that's a property manager checking on the property twice a week. I still have possessions and a corvette in the driveway.

Well at 10:06 am I was notified by the alarm co that someone had setoff the alarm. The property manager(friend) received a call from the yard man that people from the bank had broken in the house and were taking pictures of everything and changing the locks and told my yard man to leave they were cutting the grass. Well, i called my attorney and he advised me to break the locks and replace them.

When my attorney contacted the lenders attorney he apologized and said he would contact the lender immediately. These people also went through personal items which was very disturbing.

I filed a police report for breaking and entering. I'd like to have them prosecuted including the lender.

I read where this was possible. What do you think? Also, the lender lost the note and can't find it so how can he act on anything when he doesn't even have the Note?

Oct 01, 2009 06:49 PM

#21

Richard Zaretsky

THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL

Florida Real Estate Attorney

Lance - the lost note situation is another matter - consult with your attorney.

But the "breaking and entering" is a loser EXCEPT for the going through your things. They can "secure" the house and inventory the house (so if there is pre-existing damage they don't get accused of having done it). They cannot disturb your things or move them, unless they are a threat to the maintenance of the collateral.

Go to it!

Oct 03, 2009 07:22 AM

Anonymous

Lance

Thanks Richard, for your input. I am well represented Attorney wise.

Update:Yes they did go through personal items and move them around some are missing.

My attorney has filed a countersuit for damges etc.

I found out that i can press charges. Still the securization co. that claims to own the mortgage has not produced evidence that they even own the mortgage!

anyway this might be interesting to some of your readers.

http://loanworkout.org/2009/02/wheres-the-note-whos-the-holder-enforcement-of-the-promissory-note-secured-by-real-estate/

Oct 03, 2009 01:26 PM

#23

Anonymous

D Bena

In my situation, we are under short sale and for my surprise Wells Fargo changed the locks just this past weekend, i was in the process of moving and still have my belonging in the house. Since this just happened and it's the weekend. i will be calling tomorrow. I need to get my personal stuff out ASAP.. Can someone provide some advise for me.

Nov 07, 2010 12:36 PM

#24

Tchaka Owen

Galleria International Realty - Hollywood, FL

I'd just change them back - after all, you own the house, not WF.

Nov 07, 2010 03:20 PM

Anonymous

Teri

This just happend to us. We had a 30 day late in August but the mortgage has been current since but they took a hammer to our door and chaged the locks on or about Sept 26th. Do they usually do that on a mortgage that is current? When I paid the payment they asked me if it was occupied and I said it was vacant because the renter had moved out. Should I have lied? I just called to tell them it is occupied and current but all they can do is add those comments to my account. There is no direct # to thier property loss prevention department.

Oct 03, 2011 08:31 AM

#26

Michael J. Perry

KW Elite - Lancaster, PA

Lancaster, PA Relo Specialist

Richard excellent post and it does correctly demonstrate the lender's rights with an abandoned property !

Jan 07, 2012 06:18 AM

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