[RPPTL LandTen] Foreclosure Issues

Thu Feb 5 10:50:24 PST 2009

Here is a story that appeared the Daily Business Review.

Urban Forum
Tenant rights advocate gives voice to renters in foreclosed properties

January 30, 2009	 By: Paola Iuspa-Abbott 	

Purvi Shah

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hen landlords are in the process of losing their apartment buildings to
foreclosure, they often stop maintaining the properties. Leaks begin to
surface, floors cave in, and sewer systems overflow. Low-income renters
are left to fend for themselves, often unaware of the pending litigation
on the property and the inevitable eviction that comes at the conclusion
of the foreclosure lawsuit. Yet, they have a friend in attorney Purvi
Shah, an advocate for tenant rights. She works with the Community
Justice Project of Florida Legal Services and focuses on tenant and
landlord issues prevalent in low-income communities. Her legal advocacy
group offers direct legal services and community legal education. 

For the last two years, a foreclosure crisis has generated a layer of
victims who are finding little relief in the court system: tenants. They
are rarely made aware of ongoing foreclosure procedures and rarely have
a chance to go before a judge to tell their stories. Shah said judges
and local governments need to step in when landlords - still collecting
rent - let their properties deteriorate and their tenants live in unsafe
conditions. She said judges could force landlords to improve their
tenants' living conditions and persuade lenders to allow tenants to
remain in the foreclosed properties until a new buyer comes along. Early
this month, Fannie Mae announced a new National Real Estate Owned (REO)
Rental Policy that will allow qualified renters in Fannie Mae-owned
foreclosed properties to remain in their homes, according to its Web
site. The company currently has an eviction suspension in place through
the end of January, when a new policy is expected to be up and running. 

Shah spoke to the Daily Business Review about the hardships that
low-income tenants must endure to continue living in a place affordable
to them but in an unsafe environment. She also discussed the role that
judges could play in giving renters a voice in the foreclosure procedure
and the need for more laws protecting their rights. 

The interview has been edited for length and clarity. 

How are tenants being left out of the foreclosure process? 

They generally don't have a lot of rights in the foreclosure process and
are often viewed by lenders and the landlords as a liability. They are
innocent victims who paid their rents consistently and didn't enter into
a mortgage with anybody but are now being threatened with loss of their
housing. They are also being subjected to a host of situations for the
lack of property maintenance and a vacuum of responsibilities from the
landlords and the lenders. They are not required to be given notice of a
foreclosure and don't have a forum to ever discuss what's happening to
them. They are generally not included in anybody's calculations, either
the lender, the owner or the judge. 

What are the potential complications of living in a multifamily property
tangled in a foreclosure dispute? 

During the pendency of the foreclosure, you have an owner that is no
longer interested in maintaining the property and a lender that is not
an owner yet and has no obligation to maintain the property. 

Often tenants have no one to call if there is a leak or other problems.
And more seriously, there is no one who is paying the utilities bill. We
have a property at 1525 NW 59th St. that has been in foreclosure for
almost three years. About a year ago, I was contacted by a community
group that had heard about these tenants living on the property without
water. The landlord had stopped paying the water bill. There were single
mothers with young children with no access to running water. They were
purchasing drinking water and were unable to take showers. They were
living in very dangerous and unsafe conditions. We brought litigation
against the landlord. We asked Miami-Dade Circuit Judge Bronwyn Miller
to order the landlord to continue paying the water bill. But you have
landlords who argue that they don't have the money to do that. The judge
ordered the landlord to pay the bill for two months and threatened to
send him to jail if he didn't. He paid for two months, and then the
tenants had to collect money to pay for the water bill themselves. 

Did you try to contact the lender? 

We tried to communicate with Commerce Bank but nothing happened. Lenders
see tenants as a liability. They think their job is to sell the property
once they get title to it. Lenders need to reframe their understanding
... they are in the middle of the subprime market crash and are holding
numerous properties that they are not going to be able to sell because
the mortgages are upside down. They need to start viewing tenants as an
asset to a property, instead of evicting them to sell a vacant property.
If they are unable to sell the properties, they will be subject to
vandalism and crime, ultimately further devaluing property values in the
neighborhood. 

What kind of legal recourse do tenants have? 

The law in Florida is behind the time. There aren't enough laws that
protect tenant rights. We need a forum for tenants to talk to judges
about what is happening to them. There are some judges that are taking
really good measures. Miami-Dade Circuit Judge Jennifer Bailey requires
a hearing before she will issue a final writ of possession in a
foreclosed property. But there is not a requirement to do so. 

What role should judges play in protecting tenants' rights? 

Our position is judges need to follow Judge Bailey's lead, be proactive
in protecting tenants. Judges have the ability and the authority to
mandate that owners and lenders report to them whether there are tenants
living in their properties and report who is conducting maintenance.
Judges can require them to do regular updates to the court during the
pendency of a foreclosure, check in about what kind of notices these
tenants have received and hold a hearing prior to issuing any final writ
of possession to speak with the tenants. At that point, the judge could
help mediate their situation and work out a move-out date that is fair
or encourage the lender and owner to sign a lease with the existing
tenant. For the tenant in a foreclosed property, their eviction becomes
final as soon as the foreclosure is final and they have no fighting
chance to prevent their homelessness. These hearings are simply the
first step because tenants really need judges to protect their rights
earlier in the foreclosure process. It can take two to three years
before a final judgment is handed down by a judge. A solitary hearing at
the end of the foreclosure case will not protect innocent families and
children from being forced to live in unsafe, uninhabitable units
because irresponsible lenders and owners refuse to maintain the
properties as required by Florida law. 

What are local governments doing to address this situation? 

At some point the buck needs to stop somewhere. We are talking about
properties with serious life safety issues: floors falling in, sewage
going on and utilities cut off. If irresponsible owners and
irresponsible lenders don't want to clean up the mess that they made,
local governments should step in, make repairs to the property and put a
lien against the property to ensure these victims of the foreclosure
crisis continue to have stable and safe housing. Tenants are vital
components of our community. 

Is there a grassroots movement pushing for tenants rights? 

We've been working a lot with local organizations including Power U
Center for Social Change in Miami and Miami Workers Center in Liberty
City because tenants in those communities are going to those
organizations to ask for help. 

Do tenants have any tool to help themselves? 

If their landlords refuse to make those repairs, tenants can withhold
their rent, as allowed by the law. 

Paola Iuspa-Abbott can be reached at (305) 347-6657. 

Purvi Shah photo by Richard M. Brooks 

Arthur J. Menor 
Partner  
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