Tenants Protected After Foreclosure

You are a tenant in a multi-family or single family house that has just gone through foreclosure. Can you be just "kicked-out" by the foreclosing bank? The answer used to be "yes" (after Court) but now, in Massachusetts, it is "NO"!

The new Neighborhood Stabilization Act, in addition to protecting homeowners against "quick" foreclosures, protects Tenants who are living in houses that have gone through foreclosure and been sold or taken back by the lender. ( THE LAW IS MASSACHUSETTS GENERAL LAWS CHAPTER 186A)

The law states that the owner through the foreclosure SHALL NOT EVICT A TENANT EXCEPT FOR "JUST CAUSE", unless there is a sale to a bona fide third party (and there are rules about that case detailed below)

"Just Cause" is defined as follows:

1. Tenant has failed to pay the rent payments in effect before the foreclosure (or a use and occupancy charge) PROVIDED the foreclosing owner has notified the Tenant in writing of the amount of the rent and when and where it is to be paid

2. Tenant has violated an obligation of the tenancy/rental agreement (example: keeping a dog when no pets are permitted)

3. Tenant is committing a nuisance and interfering with other Tenants' rights (example: making excessive noise at 3 am)

4. Tenant is using or allowing others to use the unit for illegal purposes (example: selling drugs)

5. Tenant with a written rental agreement or lease that has expired has refused to sign an extension with similar terms as the original lease/rental agreement

6.Tenant has refused the new owner access to the unit even after proper notice to the Tenant that the new owner wishes to inspect the unit

EVEN FOR JUST CAUSE The law now requires that the owner through the foreclosure post a notice in a prominent place in the building (a place that all tenants will see) stating the names, addresses, telephone numbers and contact information for the foreclosing owner, and the building manager or representative, and stating the address to where the rent or occupancy charges must be sent.

THEN the foreclosing owner cannot evict for the following actions that are just cause until 30 days after the above notice has been posted and delivered to the tenants.

If the new/foreclosing owner disagrees with the amount or rent being charged he/she can bring an action in District/Superior/Housing Court and claim that the amount is unreasonable and ask the Court to set a new rate. HOWEVER, if there is a pre-exisiting written lease or rental agreement with the prior owner, the one who was foreclosed on, the amount or rent SHALL BE DEEMED TO BE REASONABLE.

THERE ARE TEETH IN THE LAW: If a foreclosing owner evicts a tenant in violation of the law, the foreclosing owner/new landlord shall be punished by a fine OF NOT LESS THAN $5,000.

Tenants now have the right to stay in their home despite a foreclsoure PROVIDED they

1. Pay the rent

2. Follow the rules

3. Don't do anything illegal in the unit

The only exception is that if the property is sold to a true third-party unrelated buyer - then the normal rules regarding evictions (Summary Process) apply.

This is great news and strong protection for tenants in houses that have gone through foreclosure. CAUTION: Tenants who do not follow the rules have little chance of surviving the eviction process.

The law is brand new. There have been very few cases dealing with it so do not be surprised if the bank that takes back a house is unaware of the law and its details.

As a Tenant you now have real rights. Follow the rules and be happy. Ignore them and be evicted.

Author's Copyright by Richard I. Isacoff, Esq

rii@isacofflaw.com

http://www.isacofflaw.com/

Legal Aid Crisis - Is there a Free Lawyer in the House?

Providing legal assistance for those who truly cannot afford to hire an attorney has been taken for granted. We see the "public defenders" on TV, and hear about lawyers working, without financial compensation, for the good of the public - "pro bono".

Nationwide, legal aid programs are being ravaged by budget cuts, and in many states, due to the low interest rates. Massachusetts, like many other states, has a requirement that attorneys place clients money in a segregated account, often called an IOLTA account. If the funds will be held for any length of time, a separate interest bearing account is set up for the client's benefit. But money being held for a few days or even a week is put into the IOLTA account where the interest earned funds a large part of the legal aid programs.

Interest rates have fallen significantly to merely .5% from 5% in just 2 years. In Massachusetts for example, 2007 revenue from these accounts for legal aid was $31.8million. In 2008 it had dropped 50 $15.6 million, and as of July of this year, the interest earned was only $4.1 million - that is on track for a $7 million 2009. Couple this with the monetary cuts due to a drop in federal aid and less taxes being collected, and you have a system that can handle only a fraction of the cases it should. According to Lonnie Powers, the Executive Director of the Mass. Legal Assistance Corporation, there are and will continue to be battered women, people facing foreclosure, tenants being evicted, workers having wages withheld illegally, with NO LEGAL REPRESENTATION. Thoughout the Commonwealth there will be Thousands of people who would normally qualify for legal assistance, who will not! Even criminal cases are now lacking lawyers for defendants, so the cases take longer.

This financial problem is not unique to Mass. It's a nationwide problem and one that has no easy answers. There simply is not enough money to go around. It is like the perfect storm: lower interest rates being paid for deposits, federal money being cut due to the financial crisis, and the creation of probably 25% more work due to foreclosures, an increase in domestic violence caused by money worries, and tenants falling behind in rent with their landlords evicting them (rightfully in most cases but sometimes without following the right procedures).

In my small office alone, I could have an additional 100 foreclosure cases in a month or less if I could afford to work for free (keep in mind that small law offices are just like any other small business, with salaries, rent, insurances, and other expenses to pay).

Unfortunately, there appears to be no answer in the near future;. it is a sign of the times.

Author's Copyright, by Richard I. Isacoff, Esq, August 2009

www.isacofflaw.com

rii@isacofflaw.com