Foreclosures

If you are a homeowner or the tenant of a property owner who is facing foreclosure, or has lost the property through foreclosure, there are thousands like you through California faced with the same dilemma.  Under the law, you are entitled to no special treatment because you used to be the owner, now because you had a lease with the owner. You are basically treated the same as any apartment tenant being evicted for no reason.

The bank does not have to talk to you, work with you, consider your family or children's education, or even try to sell the property to you. Junk yard dogs seem to have more manners and common sense than the people you will probably meet to tell you to get out. You can't pay them for more time, or even expect courtesy when they want to show the property to new buyers or realtors while you're still living there. Out! Out! Out! is what you get, in most instances.

Occasionally, a bank will offer "cash for keys," where they tend you some money to move out without a fuss. Sounds good up front, but what if you move and they don't pay you? Even agreements looking like they promise payment can be invalidated by having you sign, but they don't, or by having someone sign who doesn't have authority, or can't be found later, or not giving you a copy. The real zinger for tenants of the former landlord is that you sign off your rights in exchange for the money. What rights? You have the right to get your full security deposit back from the bank, because it is the new owner and the current owner owes you your deposit, even if they never got it from the old owner. [The exception is where the former landlord pays you the full deposit beforehand.]  The "cash" that you're getting is almost always less than the full deposit, so that when you sign the agreement, you give up the bird in your hand for two in the bush. The bank has the obligation to pay you the full deposit, not just a part, so your "cash for keys" agreement has you giving up the rest of your deposit, and then you have to find your former landlord, who may very well have filed bankruptcy. All that glitters is not gold.

Another quirk in the legal system is where a desperate property owner is met by the vultures who have seen the recorded Notice of Default indicating a pending foreclosure. They prey upon the desperate and often use "we can help" devices like an "equity purchase" where they "buy" your interest in the property under the guise that they will cover your mortgage payments for a while until you can financially recover, and you pay them "rent." As you can expect, they don't pay the mortgage, but just collect your "rent," and let the property continue through foreclosure. If you are one of those, you have the right to sue them but the bank's foreclosure will probably continue.

The time line on a foreclosure is this: Usually after a few months of mortgage delinquency, the bank records. posts, and mails a Notice of Default, giving the owner 90 days to bring the account current. If that doesn't happen, the next step is the bank giving a 30-day Notice of Trustee's Sale, which is also recorded, posted, and mailed. The trustee's sale is the auction where the property is sold to the bank or a new buyer. Just before the trustee's sale is the time when many property owners file for bankruptcy, because they will be hit with a huge tax bill when their mortgage is no longer their debt - the IRS sees it as "income."  Therefore, owners file bankruptcy, which stalls the eviction for about a month or so until the bank can get the bankruptcy judge to let them proceed with the foreclosure and eviction.

The time line on the eviction is this: After the foreclosure sale, it takes a few days to record the deed, and then a Notice to Quit [or similar title] is given to the occupants of the property. The notice gives 3-days to the former owner, but often includes a separate Notice to the tenants, giving the statutory 60 days to move out. This is like any other eviction notice, in that it has to expire before they can file the eviction case.

If the local rent control applies to your dwelling, and you are a tenant, it may prohibit your eviction due solely to the foreclosure. Santa Cruz does not have has such protections for its tenants. The fact the the bank starts the eviction, and seems to have a clear-cut case is not necessarily the situation. Due to the large volume of foreclosure evictions, the eviction firms often hire temporary staff who are poorly trained and make all kinds of mistakes in the eviction paperwork and process. Therefore, if you stay and fight the eviction lawsuit, you can stay in possession for a longer period of time, often months, and even work out a settlement where, if you just go, you owe nothing for all that time.