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What about the tenants in a foreclosure??

For the second time this month I had the difficult task of telling tenants that they had to move out. The homes they have been renting are facing foreclosure. This came as a surprise to the tenants as they had paid their rent on time and had a lease that runs through Spring of 2009. The investor that I am representing is selling the homes as short sales in a race against the clock to beat the foreclosure gavel.

I can't help but feel sorry for the tenants. They didn't do anything but pay their rent on time and play by the rules. They are confused and upset, as well they should be. Now, to add insult to injury, I had to inform them that I would be placing a lock box on the door and would be showing the property. I gladly agreed to minimum 24 hours notice and limited times of the day that I would show it, but the inconvenience and intrusion would still be there. I felt terrible! I tried to explain that if I could sell it to an investor, they would honor the lease. I don't think this is going to be easy...

What can we do? I've read that some states have passed laws about giving tenants time to get out. I think that something may have to be done on a national level! What would be so awful about passing a law that says if a home is foreclosed on and there are tenants, they will get 60 days to relocate?

What are your thoughts?

Posted by Ronda Densford, REALTOR Jacksonville and Northeast Florida on 10/22/2008 09:17 PM

Comments (16)

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foreclosures, tenants in a foreclosure, jacksonville fl real estate market, short sales jacksonville

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16 Comments on What about the tenants in a foreclosure??

OCT

2008

The tenants can answer the summons and complaint for foreclosure in person with their lease and tell the judge that they want the lender to honor their lease as a legal instrument binding on whoever the landlord is. Katerina

Our Cook County Sheriff stopped evicting tenants for about a week until the court system set up some new laws protecting the tenants. They are giving the tenants 120 days or the end of their lease, whichever is shorter.

My question on this whole thing is: if the landlord has defaulted who collects the rent? the Bank, the landlord or can the tenants stop paying and use their last months rent of non-payment to get their security deposit back?

Good post!

What a mess. I saw a bit on the news recently that a sheriff in a certain area is refusing to evict the tenants that you describe. Hopefully what Katerina mentioned will help them.

Its always an awful situation to be in telling good tenants they are being evicted. Once in a while in CT they allow a tenant to stay so that way the house is less likely to be vandalized.

Kristal - I believe that it was a sheriff in Chicago that was refusing to do evictions.

I have had the same issues. I made contact right away with the lender's attorney & lender and worked out a deal to keep the tenants in the property. It is to the advantage to the mortgage holder too. We put the tenants on a month to month lease and they agreed to let us continue to market the property. The current owner was willing to hand over the riens so to speak. The lender reduced their rent $50 a month for the inconveince of the showings. This property was a two unit. We did manage to sell the building with one of the two tenants still living in the building. It also brings more value to the sale with tenants still in place. Single family homes maybe sticky. The details need to be worked out such as who get rent and if security deposit are being held ect. This was also a local bank. I know laws in other states vary, so check your laws there and good Luck.

Chicago is where the Sheriff is (Cook County)... and he should be removed from office for not following the law...

That said, any bank that has a renter in a property would be STUPID to kick them out when they can keep the tenant in place and cash flow the property, or better yet... sell it to the tenant. Of course in this short sale situation, that may not apply.

This is one of the worst parts of foreclosures. That, and the pets left behind in the homes, another common problem.

The rent is another question....I know most sellers collect it as long as they can (obviously they are still not paying it to the bank)...so the tenant is doing their agreed payment, but they still get thrown out on their ear!

Florida tenants have no reason to vacate until the property is sold. But then how much time do you have?

Realisticly foreclosures in the best of times take 100 days. With the case load now, that is running more like 200 days or even longer. If the house is in active short sale mode the foreclosure may be slowed down by the bank through instruction to the attorney, so the time can be even longer.

Banks LIKE the property to be occupied.

My suggestion is for tenants to contact the lender immediately and tell the lender they are paying rent and how much. The lender could instruct the lender attorney to ask the court for the tenant to pay the money into the court registry - and this could lead to an occupancy under lender ownership even after the foreclosure sale.

The needless thing to do is immediately move out. Frankly there is no rush to vacate immediately after the lender serves the summons on the tenant. Follow the suggested steps above and take time to find a good substitute rental.

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 New Website www.Florida-Counsel.com

NOV

2008

Could the tenant sue the owner/bank to get an extention on there stay until they can find another place?

There needs to be some kind of emergency law passed so this does not happen to people.

Hope you can sell to an investor so they can stay at least till they can find a place.

Good Luck!

Robbie

FirstCoastRentalAds.com

DEC

I think that is absolutely terrible that people are being put out of rental properties myself and my family are being displaced because of the negliegence of a landlord. And then you get these real estate agents who you have made an agreement with the bank and they want to come in an take pictures of the home that you have already made arrangements with the bank on and trample all over your belongings showing it. It is bad enough that at the most wonderful time of the year that you have no Christimas and that all of your belongings have been molded out because the house is a mold infested sick house. God knows that we don't want to be here any longer than we have but as bad as it all may seem we have nowhere to go. The landlord was suppose to be addressing the mold problem as it was in the past and the next thing you know it is being foreclosed upon and I am very angry that my 13 year old straight A student daughter that has some medical problems as a result of being in sick houses cannot be given enough consderation to move out gracefully. The landlord strung me along for a very long time with his empty promises of him recovering the house and when that became ineffective than he began this Hog Wash about some make believe investors then that fell through and here we are with threee weeks to move and nowhere to go and counting the days, minutes and seconds as they come, what a horrible situation for anyone to put another person in. If you have no intentions of being fair then don't get into the business.

The information that was left by Barbara I need make my information as how to reach me if anyone has any suggestions on this that I have commented on Thank You. I can be reached at bee_50@live.com

Barbara. I am so sorry that you're in this position! Is there some sort of Legal Aid department in your city? I don't know where you're located, but most cities have some sort of free or reduced priced legal departments that can help. Please look in your phone book immediately or Google Legal Aid in your city for a phone number. You are just one more reason why I think there MUST be some type of protection for renters. Not only are you going to have to move because of the short sale of the home, it sounds like you had serious issues (mold) prior to this latest development.

I wish you well and you have reminded me why I refuse to take short sale listings without giving the tenants at least 90 days notice to move. Maybe someone more knowledgable about the legal issues will reply here too--or better yet---will contact you direct.

Ronda

DEC

Wow - is there a lot of info here. Will come back and re-read it several times. Wish everyone well - know the owners do not want to lose the property and the tenants do not want to lose their homes. Everyone is losing.

JAN

I'm in a similar situation. For three years, I have enjoyed my Florida duplex. My landlord has been helpful and cooperative, even replacing a refrigerator when we asked and sharing the cost of a garage door screen which we requested. He's a family man and a hard worker. I feel bad for him to lose the investment, but now he's telling us lies.

We were served with papers in October, 2008 and were shocked. When I contacted him, he said it was all a mistake. He was working it all out. Everyone knows it costs a chunk of money to move. First and Last month's rent, plus a security deposit. But a lawyer said we had to continue paying the rent or we could be evicted. I responded to the served papers and was given a website to check each day for progress on the foreclosure. Financially, I knew I'd need to wait until January so I could withdraw from my IRA. Now, heading into February and I'm getting nervous. I've been checking out other places to live in the same city, but my concern is that the places I'm checking out will also fall into foreclosure. Many of the properties here were bought for investment purposes. I don't trust the property management folks to tell me the truth, either. There job is to fill the vacancies. My duplex neighbors went in a different direction. Stopped paying rent for three months, saved the money, and waited for the eviction notice. When it came, they were ready to go. I was feeling confident that I could stay two steps ahead of the final foreclosure. Now I'm hearing about short sales and I'm really biting my nails.

Catherine. I'm so sorry to hear about your situation. You're not alone! There are countless others facing the same situation. I know that doesn't make it any easier for you to bear. I don't know what city you're located in, but please, first thing Monday morning, call your City Information department. With a little luck, they will guide you to someone that can help immediately. Jacksonville has started to aggressively address every case like yours through the City of Jax Hotline. Please see if your city has something similar. My next stop would be with United Way. You would be surprised at the wealth of information they have for people about a lot of different topics. All of this type of thing is so local. You will need to start with your City and go from there.

I hope you're able to find some answers. I can only imagine how stressful this must be for you and your family.

Please don't count on ..."feeling confident that I could stay two steps ahead of the final foreclosure." There is no real time table on the part of the lenders or the people that physically do the foreclosure. It could be months, it could be weeks. Please try to make other arrangements before they come and force you to move out. That would be even MORE stressful!

Best of luck to you. Please let me know how things go.

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