Tenants And Foreclosures

February 21st, 2008 | Tags: Foreclosure

Tenants, more often than not are totally in the dark about whether the house is in foreclosure. The landlord pockets the rent and keeps them ignorant until the eleventh hour. Meanwhile repairs go unattended. The landlord who is about to relinquish the post hardly has any interest in seeing to repairs. On the other hand the new owners – the lenders or the banks, refuse to take on the role of being landlords. So utility bills remain unpaid and the house runs into disrepair. Stuck with rising number of foreclosures the banks are in no position to sell off and clear out. Caught in the middle life becomes hell for the tenant.

Legally speaking the renters lose their tenancy rights with the onset of foreclosure. Usually tenants have to move out within 30 days of being served notice. The new owners try to edge them out quickly and fast because a vacant house fetches a better price. If tenants refuse to comply they have to face a lawsuit. It is difficult to find alternative housing accommodation. There is no law that protects the tenants from eviction.

However there are some exceptions. Those tenants who join in the federally financed section 8 programme will have their lease protected – as is the case in New Jersey, New Hampshire and Columbia district. From the end of November 2007 Massachusetts came to be included. Here the new owners cannot throw out lease holding renter if the latter has been paying rent and not violated any major tenancy law. Those tenants who reside in cities where there are rent control laws gets protection from eviction without justifiable cause.

Although the most favourite argument is that a vacant house is easier to sell, in reality the opposite holds true. A unit that has stable tenants will be more valuable than a vacant house that will run to seed with each passing day. If the entire neighbourhood becomes a happy hunting ground for anti-socials the price of real estate will further plummet. Thus it is difficult to understand the logic in favour of evicting tenants. A small fee to the management firm will keep the establishment running and paying. To expedite the eviction of tenants smoothl,y often cash incentives are offered by the banks in exchange for keys. Thus the numbers of tenants joining ex-house-owners have swelled. As a last recourse the tenant can sue the ex-landlord for not delivering the goods.