Monday, December 1, 2014

On Short Sales

My landlord says that he's going to do a short sale and I have to move by the end of the month.  Am I protected by the foreclosure laws?

Short sales are becoming a lot more common, as the Homeowner Bill of Rights has made foreclosure a bit more difficult for lenders.  (Remember that many landlords obtained their properties by claiming that they were going to be owner-occupiers, so the lender doesn't know that there are tenants living at the property.)

Let's start with the first issue.  Your landlord can't just tell you to move by the end of the month.  If you have a lease that hasn't expired, your landlord can't evict you until the end of the lease.  If you have a month-to-month agreement, your landlord has to give proper written notice.  If you've lived in your unit for less than a year, your landlord must give you 30 days to move.  (And yes, that's not enough time to move, but it's the law, and the powers-what-be have chosen to be oblivious to the fact that people have jobs, children, lives, and can't just drop everything to deal with the landlord's whim.)  If you've lived in your unit for a year or more, your landlord must give you 60-days' notice.

Often landlords who are in trouble talk to realtors who tell them that the short sale will be easier if there are no tenants in the property and, not wanting to lose a single sou of rent, wait until the building is about to go on the market before notifying the tenants that they have to move. That's why so many tenants get the panicked phone call from the landlord telling them that they have to move soon, now, yesterday.  But you should gently inform the landlord that proper written notice is required, and you will cool your heels until you receive same.

Unfortunately, you're going to have to move within the 30 or 60 days. Short sales aren't foreclosures, and so you aren't covered under the foreclosure protection legislation.  However, if you have a lease, neither the landlord nor the new owner, if the property is sold, can evict you until the lease expires.

And, as always, if your community has rent control and/or "just cause" eviction protections, you may be protected by those laws.  Call a local tenant organization or the Rent Board to see whether or not you are protected against eviction.

Wait a minute.  I'm being evicted because my landlord is in trouble. Why don't I have the same protections as tenants in foreclosed properties?

Oh, those reading this are going to realize that this is a set up question so that I can rattle on about the State Legislature and its commitment to serving the interests  of,and receiving campaign contributions from, the real estate industry.  But I will be brief.  Foreclosures were a disaster for the anti-tenant interests, as tenants weren't being evicted for some alleged malfeasance or malpractice on their part, but because landlords had gotten themselves into financial trouble.  Tenants were recognized, sometimes in public, as entirely innocent parties in the process.  If they extended such protections to tenants in properties that were being sold in short sales, who knows where it would end?  Tenants throughout California might be able to give up the forelock-tugging that landlords and their agents in the Legislature so much enjoy.