Advising Section 8 Tenants whose buildings have been foreclosed

A recent blog on the foreclosure crisis posted by Liz has generated a slew of interesting responses. For instance, Chris provided nifty information on mortgages and mentioned one particular side effect of foreclosure that deserves its own post; specifically, the increased foreclosure of multi-family homes and how these end up displacing owners as well as tenants.

The foreclosure of rental properties is forcing renters out of their homes in record numbers. In previous blogs, we have spoken briefly about the shift of former homeowners into the rental market, and how this increased demand on the rental housing supply will –inevitably-drive up rents. We have, however, neglected to discuss some tools that can help tenants slow down the onslaught on housing stability caused by these foreclosures.

As lenders (or the investment trusts) take over residential buildings, many feel pressured to get properties vacated and ready for resale. Some lenders have hired local real estate agents who employ intimidation tactics and take shortcuts on tenant’s rights in an effort to force them out of their apartments.

Although under Mass law leases will not protect tenants from post-foreclosure evictions (a new owner is not required to honor the leases signed by a former owner), tenants holding Section 8 vouchers have protections that extend past the foreclosure. It is important that we help spread the word about the legal protections available to renters living in these properties. The information below compiles the best advice as provided by advocates at the WilmerHale Legal Services Center of Harvard Law School. However, if you find yourself renting in a property under foreclosure, it is always advisable to consult about your specific situation with a legal professional. You can always count on Mass2-1-1 (dial 2-1-1) to provide a referral to a legal services program in your area, or the Mass Bar Association’s lawyer’s referral line ((800) 392-6164)

All tenants should know that they cannot be evicted until the property owner goes to court and follows very specific procedural requirements.

• First, the tenancy must be terminated by sending proper notice to the tenant.
• Then, the tenant must be served with a court complaint for eviction, go to court, present evidence and win.
• In Mass, a landlord may not, for example, lock out a tenant from their apartment, or shut off utilities in an effort to get them out without going to court.
• Furthermore, because federal law supersedes state law, a Section 8 lease will survive foreclosure. This means that a lender taking over a property will not be able to evict a Section 8 voucher holder during the term of the lease without showing “good cause” for the eviction (i.e., a violation of the lease terms, non-payment of rent, etc).

Many lenders acquiring foreclosed properties offer small sums of money to tenants as an incentive for them to vacate the premises quickly. The lender or agent will suggest that these offers are official, require immediate acceptance, and that rejecting them will leave them without any compensation. These “cash-for-keys” offers are misleading and are terrible deals for the tenant because, as part of the arrangement, the tenant must waive any claims against the new owner, which include the return of the security deposit and any recovery for utility shutoffs, maintenance disrepair, and code violations.

Even if an eviction order is granted to the new owner, a tenant may ask the court to grant a “stay of execution” so long as the eviction is not the result of a lease violation. Although at the discretion of the court, disabled and elderly tenants may ask for up to a year and other tenants may ask for a six month stay.Tenants are advised to keep track and hold on to any communication from the new owner related to the termination of the lease, “cash-for-keys” offers, statements of condition, etc. These documents will help build a case and support the tenant once the eviction proceeding begins.

Tenants should always notify owners of any problems in writing, and can document it further by contacting the Inspectional Services Department, or the local Board of Health –if outside Boston-, for an inspection. If the problem is serious, tenants are encouraged to request an emergency inspection and file a restraining order to have the problem corrected immediately. If the tenant does not know the identity of the new owner, all these steps can be taken against the owner’s agent.

Although this does not resolve the current foreclosure crisis, or relieve the rental market, these tools can help extend tenancies, allow for the preparation of claims and counterclaims to present in court, and may be able to help secure funds from for tenants to find new, safe, and adequate housing.