Landlords In Foreclosure May Mean Trouble For Tenants

In Chicago, Illinois, the Daily Southtown recently reported on the potential trouble tenants face when their landlord is stiffing the mortgage lender out of its mortgage payments and facing foreclosure. Among the recent problems for tenants in one building in foreclosure were:

1. failure to fix plumbing problems, maintain the yard or clean up a sewage backup that forced one tenant to flee the building,
2. worries that the electricity and gas will be shut off,
3. driving garbage around to the alley for disposal because the path through the back yard is overgrown,
4. loss of many belongings, including furniture, important documents and personal mementoes after one tenant's apartment was flooded with sewage,
5. loss of the family cat for one tenant, which had to be taken to a shelter because pets are not allowed in the tenant's new apartment,
6. one tenant having to boil water to bathe her two children, ages 4 and 9, after the flood of sewage extinguished the pilot lights in the basement,
7. putting pots under the sink to catch water that leaks from the plumbing and is rotting the floor.

In another case, the tenant did not know the house he had been renting for seven years was under foreclosure until the sheriff's department woke him up one morning in May to evict him, he said. "From that point on, all hell broke loose," the 50-year-old veteran said. "They told me to stand outside, and they started throwing all my things out." The tenant said he was homeless for more than a week after his unexpected eviction and lost nearly everything he owned. "I lost a lot of things that were sentimental, and that really hurt me," he said.

Calls to the tenants organization from renters who are living in foreclosed buildings have snowballed, according to [John Bartlett, executive director of the Chicago-based Metropolitan Tenants Organization]. He said eviction, utility disconnection and recovering security deposits are among their top concerns.

Although Illinois renters whose landlords default on their mortgage payments soon will be protected from eviction under a state law that will give them until the end of their lease or 120 days to find a new home, the new law will not protect them from the above listed possible problems that can arise in foreclosure situations, which are not covered by the new law.

For more, see Tenants stuck when landlord loses property.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here.

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The new Illinois state law, which goes into effect on January 1, 2008, can be found either at Public Act 95-0262, or at 735 ILCS 5/15‑1701. equity skimming unwittingly delta