Unwitting Tenants Being Left Holding The Bag In Home Foreclosures

Given the high rate of foreclosures in California, The San Jose Mercury News recently ran a story of how these foreclosures are affecting unwitting California tenants who find themselves being required to leave a rented home that they have dutifully paid rent on throughout the period of their occupancy. Some of the highlights from the story:

1. Nearly 9,500 California properties were sold in foreclosure auctions in August, according to ForeclosureRadar.com. Of those, 44 percent were not owner-occupied, the company said.
2. [M]any renters don't know the whole story [about the foreclosure of the home they are renting] until they're being informed by a bank's agent that they need to move in 30 days or face eviction.
3. [One real estate agent] said she has seen cases where landlords rented property to new tenants just before the home's foreclosure auction date, collecting a deposit and rent "knowing that the house would be gone in two weeks," she said. "It's unbelievable what people do, unbelievable."
4. In most cases, once a property has been foreclosed upon and the ownership changes, tenants' leases are wiped out, and they must vacate within 30 days (60 days if they've lived in the property more than one year).
5. Tenants in San Jose rent-controlled units would get 90 or 120 days, depending on how tight the rental market is.
6. Another exception is in rent-controlled units in cities with "just cause" eviction laws that do not list foreclosure as one of the causes for eviction, such as Berkeley, East Palo Alto, Hayward, Oakland and San Francisco (see Some Foreclosing Lenders Conducting Illegal Tenant Evictions In Oakland).
7. Many tenants don't know that lenders newly in possession of foreclosure properties will typically offer "cash-for-keys" payments of $1,000 or more to tenants who agree to vacate in about two weeks and leave the property clean, said Sean O'Toole, founder of ForeclosureRadar.com. The payments save lenders the time and expense of evictions, and also some cleaning costs. Tenants still have the right to recover their deposits from their former landlords.

For more, see Renters left hanging after foreclosures.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here. equity skimming unwittingly delta