Some Tenants Victimized Multiple Times By Landlords Facing Foreclosure

In Northern California, The Modesto Bee reports on the problems many tenants are having with their landlords who are engaging in what some statutes call "equity skimming" (California law calls it "rent skimming"), the practice where financially overextended landlords rent out their property and pocket the rent collected from their tenants while stiffing the mortgage holder out of its monthly payments, thereby allowing the property to go into foreclosure:

• It happened to Shari Torigian of Patterson three times in three years. Cheryl Vrba of Los Banos said it happened to her four times in four years. It is happening now to Alexis Grijalza of Modesto and her three children. Renters are being forced out of houses every day in the Northern San Joaquin Valley after homeowners default on mortgages and lenders foreclose. The result often is financial hardship for renters who had no clue their shelter was in jeopardy.

• "It is stressful. Where are we going to stay now? We have three kids, and my baby was just born Oct. 3," lamented Grijalza, who recently learned the Vernon Avenue house she's been renting for more than a year was repossessed by lenders. The lenders insist she move, but Grijalza doesn't have a car or good credit. She's fearful she'll become homeless.

• To convince her to move out, the lenders offered to pay her $1,500 if she'd leave in two weeks. That's called "cash for keys," a technique some lenders use to avoid the time-consuming eviction process. Many home renters say such compensation doesn't begin to cover the cost or hassle of moving.

After being screwed over three times in three years by landlords allowing their properties to go into foreclosure and before signing her next lease, tenant Shari Torigian reportedly checked out her most recent landlord's credit and references, researched public records about the home's ownership to assure it's not in the process of being foreclosed on, and insisted the owner sign a three-year lease that guarantees all her expenses will be paid if she's forced to leave.

The story also makes the following points on two laws that may provide protection to California renters in these circumstances:

• California Civil Code Section 890-894 enables tenants to sue landlords who, during their first year of ownership, collect rent but don't pay their mortgages. Tenants can sue to recover actual damages, including moving costs and security deposits, plus attorney's fees and costs. The court also may award tenants exemplary dam-ages of at least three times the amount of actual damages.

• California Civil Code Section 1950.5 [subsections (h) and (j)] enables tenants to sue their previous landlords and the current property owners, including lenders who get the property after foreclosure, for the return of security deposits.

For more, see A renter's dilemma: Foreclosures can hit those who don't own (Foreclosure pits unwary against landlords, lenders) (if link expires, try here).

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