The Housing Chronicles Blog: Rising foreclosures impacting more renters

Wednesday, February 13, 2008

Rising foreclosures impacting more renters

Many people think that once they've signed a lease for a certain period of time that they're safe from eviction and rental increases. Which is true unless the rental unit goes into foreclosure, in which case many leases are rendered null and void. I had blogged about this happening last month in Stockton, but now it's also happening throughout Southern California -- especially in areas such as the Inland Empire where single-family homes had made popular rentals.

The California Apartment Assn., the state's largest organization of rental property owners, estimates that as much as a quarter of all foreclosed single-family residences are occupied by renters. The number of renters ensnared in the foreclosure fiasco is even larger when duplexes and other multi-unit buildings are factored in.

And the evictions show no sign of abating. Total foreclosures of single-family homes statewide rose more than 400% to a record 31,676 in the fourth quarter from a year earlier, according to DataQuick Information Systems...

For many such people, this can mean even steeper rents because the wave of foreclosures has spurred greater demand for rental housing -- a blessing to landlords who don't have banks breathing down their necks.

Sixty percent of Los Angeles residents are already renters, according to the National Multi Housing Council, an industry group. That compares with a nationwide average of 32%.

State and local officials say that many evictions could be avoided if people knew the legal protections available to them. However, few lenders and property managers make such information available during the eviction process...

Offering financial inducements is a common practice when renters are being pushed to vacate a foreclosed property. It's called "cash for keys" and can involve payments of as much as $1,500, ostensibly to help a tenant resettle but also to get him or her to waive any claims to the rental property...

State officials said that under California law, existing rental agreements are essentially wiped out when a property is foreclosed upon. All that's required is that a tenant be given at least 30 days' notice that he or she is being evicted.

But those officials also said that state law can be trumped by local rent-control statutes, which often provide tenants with more far-reaching protections.

These "just cause" provisions of many municipal rent-control laws limit the ability of landlords to evict tenants, even those on month-to-month leases. They also include cases in which ownership of a property changes hands, such as a foreclosure...

ities with "just cause" provisions include Los Angeles, San Diego, Santa Monica, Thousand Oaks, West Hollywood and Glendale.

However, not all "just cause" provisions are created equal. San Diego's requires that a tenant occupy a property for at least two years before the provision takes effect. Glendale's allows an eviction to proceed if the landlord plans to remove the property from the rental market or have a relative move in.

Moreover, not all rental properties may fall under a city's rent-control protections. In such cases, state law would probably apply, which would allow a foreclosure-related eviction to go ahead.

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