Transcript Tenant Rights During Foreclosure – MAAPL

Tenant Rights During
Foreclosure
Workshop for Tenants
Marc Potvin & Myrta Cupeles
Neighborhood Legal Services
170 Common St., Lawrence MA
(978) 686-6900
February 17, 2009
What is the foreclosure problem?
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Foreclosures are exploding
Tenants are living in bad housing because owners
not taking care of properties
New owners want properties empty
New owners using “cash-for-keys” inducements and
eviction threats to pressure tenants to move out
Forced moves are stressful to families
Vacant properties are bad for neighborhoods
What is a “foreclosure”?
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Legal process for a lender to take ownership
after a borrower stops paying a loan
(mortgage)
Four Steps
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Step 1 - Give notice to owner
Step 2 - File Complaint in Land or Superior Court
Step 3 - Hold a foreclosure auction
Step 4 - File a foreclosure deed at the Registry of
Deeds
Basic Legal Rights: Your Tenancy
Survives a Foreclosure
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Foreclosure does not automatically end any tenancy
Tenants do not have to move just because the
landlord lost the property in foreclosure
Tenancies at wills (no lease / month-to-month)
continue on same terms as before
Leased tenancies convert to tenancies at will
It is illegal for the new owner to treat tenants as
trespassers, do a lock-out, or shut-off utilities
Basic Facts for Tenants:
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The bank, person or company that purchases at the
foreclosure auction becomes the new owner and
landlord with full responsibility for repairs
If the new owner or its agent tells a tenant that they
must move, the tenant does not have to
Only a judge can evict a tenant; self-help evictions
and lock-outs are illegal
It is usually best to stay unless a tenant already
wants to leave and has a good place to go to
Don’t Be Tricked by Cash-For-Keys
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Cash-for-keys offers ($500 – 30 days) are a cheap
scam to pressure tenants into moving fast
Cash-for-keys offers are almost never a good deal
The cash won’t cover moving or security deposit
Tenants must sign away their legal rights: return of
security deposit, damages for utility shut-offs, bad
conditions, etc.
Tenants usually do much better in court, both in
money and time
What If You Sign & Change Your
Mind?
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If you sign a cash-for-keys agreement and you
change your mind because the situation
changes, or you cannot or do not want to
move, you don’t have to move
You likely will not get paid and you probably
gave up legal claims
But the new owner must still go to court to
evict you, and you can still raise defenses and
ask for more time
Facts for Subsidized Tenants
(Section 8, MRVP, etc.):
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Tenancy continues after foreclosure
During first 12 months of a tenancy the new
owner can evict only “for cause”: tenant must
violate the lease
After 12 months a new owner can terminate
only for “good cause,” which may include
“business or economic” reasons
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Owner must prove that vacant unit is a good business or economic
reason
Should You Pay Your Rent During a
Foreclosure?
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Tenants are responsible for paying rent
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Until a foreclosure sale, tenants should continue
paying rent to the old landlord
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Always get receipts
If you cannot locate the old landlord, hold the rent & put
it in a separate bank account, if possible
Tenants should stop paying rent to the old landlord
when there is a foreclosure sale
A new owner has the right to collect rent
Should You Pay Your Rent During a
Foreclosure?
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Beware of the old landlord attempting to
collect the rent. If in doubt, hold rent and put
it in a separate bank account, if possible
Keep receipts to prove payment
If new owner did not give notice and later
claims rent due, tenant can defend & force
new owner to sue old owner for rent actually
paid to the old owner
What if the new owner refuses rent?
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New owner may refuse rent or won’t request it
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Questionable technique to avoid admitting tenancy
Good technique to cause you to fall behind in rent
If rent is refused, send a certified letter to new owner
offering to pay rent & asking to whom you should
pay
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Keep copy!
Save rent money, and put it in a separate bank account, if
possible
Tenants in Condos
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Condo fees are the responsibility of the
owner, not the tenant
If the owner fails to pay the condo fee, the
condo association is legally permitted to
demand and collect rent from the tenant until
the balance owed is paid off
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Keep condo demand letters
Get and keep receipts for all payments to
association
Right to Utilities After Foreclosure
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Utilities covered: water, sewer, electric, gas, heat
If tenant had a lease: a new owner steps into the
shoes of the old owner
If tenant at will: new owner must pay for all utilities,
except those that the tenant agreed to pay under a
written agreement with the old landlord
Problem: foreclosing entities often ignore utilities
for which they are responsible. This lead to shut offs
Dealing with Utility Shut-Offs
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Contact new owner immediately & demand action to prevent
shut-off or restore service
Contact utility company & request service be restored or not
be terminated due to the foreclosure. Tell utility that landlord
lost property in foreclosure
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If problem remains, call Dept. of Telecommunications &
Energy (DTE) Consumer Hotline - 800-392-6606
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Many utilities will not shut-off when informed of foreclosure status
Don’t have utilities put in your name; only the owners
DET staff can and do order utilities to restore service
If these fail, go to Housing Court for a Temporary Restraining
Order (TRO) to order new owner to pay the utility bills and
provide service
What if you are living in bad
conditions?
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Owners are responsible for making repairs to an apartment
and common areas, including snow removal
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Tenants should always notify an owner of problems
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All housing must meet the standards of the State Sanitary Code
Retaliation against the law – penalty is 3 times monthly rent
In eviction case, presumption of retaliation within 6 months of
complaint or request for code inspection
Notice also can go to RE agent, prop. manager or lawyer
If pre-foreclosure, notify current landlord; if post-foreclosure,
notify new owner
Notify in writing. Keep a copy
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This is proof that the tenant notified the owner and owner knows
about problems
If Bad Conditions Continue
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If bad conditions continue ask for an inspection by
Inspectional Services Department at City Hall
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(978) 620-3130 in Lawrence
Tenants can request a full inspection of apartment and all
common areas (hallways, laundry rooms, basement, outside)
ISD will give tenant a report of code violations and will
order owner to make repairs
ISD should re-inspect and may take the owner to court
Tenants should clean up before inspection to avoid
citation
Take pictures and write date on back
How do I get repairs made?
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First complain to the owner in writing
If no response, call ISD for an inspection
If serious or emergency conditions, get ISD
report and go to Housing Court for a
Temporary Restraining Order (TRO)
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TRO will order owner to make immediate repairs
TRO can be brought against prop. manager or
R.E. agent if owner not known
Evictions After a Foreclosure
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If new owner cannot persuade tenant to leave,
the only option is to begin the formal eviction
process
To evict an owner must follow specific legal
procedures:
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Give tenant a valid “notice to quit”
File a complaint in court
Prove case and overcome tenant defenses
Evictions in a Nutshell
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Notice to Quit
Court Summons & Complaint
Tenant Answer
Tenant Options
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Discovery
Transfer to Housing Court
Court Hearing
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Mediation
Judgment or Dismissal
Obtaining a 6-12 month Stay
Eviction Step #1 - Notice to Quit
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Before a landlord can evict, the tenant must be given
a written notice of tenancy termination (called a
“notice to quit”)
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Often uses phrases such as “tenant must deliver up” or
“vacate” the apartment
Notice will state a date for the tenant to move
You do not have to move by the date!
A notice to quit does not determine who is entitled to
have legal possession of an apartment
Only a judge can decide
Help is Available to Tenants
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Don’t panic if you get a Notice to Quit or
Summons and Complaint
If you receive a Summons and Complaint
come to a NLS Foreclosure Eviction Clinic
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Get advice
Get help with completing your Answer and
Discovery forms
Remember – you are likely to do better at court
Eviction Step #2 – Court Complaint
Landlord can go to court only after the notice period is
over
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Legal filing called a “Summons and Complaint”
Complaint must state the reason for the eviction
Complaint can be brought by owner or agent
Must be served by a constable or sheriff
Will state “Answer Date” and “Original Trial Date”
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Answer Date will be about 7-14 days after service
Original Trial Date in Lawrence is the Thursday after the Answer
Date
Step #3 – Tenant files “Answer”
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The Answer is the document you file to tell your
side of the case
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Easy-to use Answer forms are available from:
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It will include your Defenses
May include Counterclaims against the owner
Neighborhood Legal Services or
On-line at www.masslegalhelp.org
The Answer must be delivered to the court and the
landlord (or landlord’s attorney) by the Answer
Date shown on the Complaint
Major Foreclosure Eviction Defenses
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Technical Defenses
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No notice to quit or defective notice to quit
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Does not end tenancy on a rent day
Does not give a full rental period
Unclear or misleading language
Owner files complaint before notice to quit expired
Complaint not signed by an attorney (if corporate
landlord)
Owner can’t prove ownership (no foreclosure deed)
Complaint is defective or not served
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All tenants not named
Reason is different from notice to quit
Major Foreclosure Eviction Defenses
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Bad conditions
Interference with utilities or use of the home
(Breach of Quiet Enjoyment)
Security Deposit & Last Month Rent
Violations
Retaliation - for complaint of bad conditions
Discrimination (i.e. Section 8, familial status)
Why Use Tenant Discovery
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Great tool to get information to prepare your case
If tenant requests Discovery by the Answer date, the
trial date is automatically postponed for 2 weeks
3 types of Discovery
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Interrogatories (Questions) – up to 30 allowed
Requests for Documents
Requests for Admissions – owner must admit or deny
facts
Easy-to-use discovery forms are available from NLS
or at www.masslegalhelp.org
Transfer from District Court to
Housing Court
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If eviction is filed in the District Court you can
transfer the case to the Northeast Housing Court
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Strongly recommended
More knowledgeable judges and housing specialists
Usually postpones trial date
How? File a “Transfer Form” with District and
Housing Court before the Trial Date
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Form available at NLS or at www.masslegalhelp.org
Understanding Security Deposits
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Foreclosure does not terminate
security deposits
Mass. law requires old landlord
to transfer deposit to new owner
at time of sale (rarely done in
foreclosures)
Tenants can recover deposits
from:
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Old landlord (can be a problem
because insolvent or gone),
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or
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New owner, unless new owner
is the foreclosing entity and a
bank charted by Mass. or the
U.S.
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Best to bring as counterclaim
against new owner because it
can serve as an eviction defense
On anniversary date a landlord is
required to pay the interest to the
tenant or inform the tenant to
deduct the amount from the next
rent payment
If you already moved, send a 30day demand letter and follow
with Small Claims lawsuit
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Under G.L. ch. 93A, tenants
can win triple damages in a
small claims action
Tenant Counterclaims
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Claims brought against owner for money
damages
Use to pressure bank into giving a lease or
more money and more time for a move out
Bad Conditions (rent rebate)
Breach of Quiet Enjoyment (no heat, no
utilities, lock-out, unlawful entry, bad
conditions) (3 X Rent)
Tenant Counterclaims
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Unfair or Deceptive Practices (Consumer
Protection Violations – scare tactics)
Infliction of Emotional Distress
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Headaches, stomachaches, insomnia)
Retaliation (3 X Rent)
Security Deposit Violation
Eviction Step #5 – Court Hearing
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Thursdays is eviction day at Housing Court
NLS staffs a “Lawyer-for-the-Day” table
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Case referred to a Housing Specialist for mediation
Banks agreeing to tenancies or better move out deals
when faced with worse care scenarios
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Services range from advice, assist in mediation, to full
representation at trial
Tenant has good defenses – likely to keep possession
Tenant will win $$$$$ damages
If no agreement reached, case goes before judge
Even if you lose your case . . . You
still get time
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Tenants are entitled to seek 6 months time to
find a new place to live
Called a “stay” of the execution
If tenant is elderly or disabled, stay can
extend to 12 months
Final Words
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Almost never take a “cash-for-keys” offer
Write to the owner about bad conditions
Ask for a ISD inspection
Use court process to obtain more money, more time
or keep their apartment
Attend a NLS Eviction Clinic
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NLS can assist you to file your Answer and prepare for
court
Tenants will almost always do better at court
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Questions and Answers