Forclosure on a rental....options?

January 13, 2009 11:53 AM

My parents have been renting the same house for about 21 years. The landlord died a couple of years ago, and the house was purchased by a neighbor. My parents were allowed to stay. They received a notice a few days ago that the house has been foreclosed on and that they have to move by mid-Feb. They are extremely financially limited. What options are available?

This is in California. My Step-dad has been unemployed for months due to an injury...his disability has run out though...but the doctor will not allow him to return to work. (He really isn't healthy enough to work anyway)...but they won't approve social security or perm disability or anything (not sure of all the details). My Mom has a very part-time job, only making around $50/week on that. They have another couple of jobs that bring in a few hundred a month (maybe a grand?) but they are both "under the table" and therefore can't really be used to demonstrate income.

The good news: They need to get the hell out of that house. It has been a burden on them for YEARS. The electricity is screwed up...the HVAC is screwed up....the roof is screwed up....it's just a huge mess. (well..the house is a mess..but it is kept clean)...

So the problem is finding another place. We are looking through Craigslist and sacbee and stuff...but I don't know how that will turn out.

Do they have any options? Is there any way to extend the move-out date? The way we figure it, there's no way they would pass a credit check with a rental company...so they have to find someone willing to rent to them personally? Oh yeah there are two teenage daughters that still live with them. There are 3 other kids (adults) but none of them are really in a financial position to be able to help out (myself included). :(

Any thoughts?

posted by AltReality to grab bag (14 comments total)

There have been options in other places where the owner has not been meeting obligations. In Chicago, for example, the sheriff was refusing to serve eviction notices on rental properties because the renters were not the ones at fault. It's worth talking to the bank and asking them if there can be any kind of forbearance offered in terms of an extension - but they're probably not going to let your folks stay forever since the bank's duty is to sell the place and a potential buyer isn't going to want the place occupied.

You are correct that usually individual landlords and not management companies are more forgiving, but this is not a good situation. I would not rent to your folks nor would I recommend them as renters to a client. I would be asking where the rent is coming from.

If they truly have no income then they need to go to social services and get help. Even if that help is pointers to public housing and the like.
posted by micawber at 12:03 PM on January 13, 2009

Can the adult children let family move in with them? Maybe the parents can pay rent to one of their children?
posted by onhazier at 12:11 PM on January 13, 2009

micawber: Thanks for your response...yes..that is what we were thinking as well...bad situation, but not sure how it could have been avoided.

onhazier: I live in a 2 bedroom apartment with my wife and son...my sister is in a 3 bedroom house with her husband and two children, and our brother is in the military. I mean if it comes down to being on the street or staying with us for awhile then of course the place is open...but it would be very uncomfortable. the girls could stay with us for a bit....but this isn't really a solution to the overall problem. The family finding a place to stay isn't the real issue, but finding a place for their house full of crap is the problem. I guess we can look into storage....but wow...that is such a pain.
Thanks for the response though :)
posted by AltReality at 1:14 PM on January 13, 2009

As far as extending the move-out date: Eviction is a legal process that can be contested by tenants. They probably will not win in the end, but they can use the time chewed up in the legal system to sort out their options for a new place. Get yourselves to a legal clinic or tenants-rights attorney to find out how to respond correctly to the eviction notice and preserve their rights. Local laws may also affect the bank/owner's rights here, if your city or county has rent- or eviction-control legislation.
posted by expialidocious at 1:22 PM on January 13, 2009

I know it will be hard, but this sounds like a good time to weed through the "house full of crap" and toss it, donate it or sell it. Maybe they could make a little extra cash since it sounds like every little bit will help.
posted by Bunglegirl at 1:43 PM on January 13, 2009 [2 favorites]

WRT to extending the amount they can stay there, definitely contact the bank holding the note on the house. For example, as of 01/09/09, Fannie Mae has a policy of allowing renters to stay in foreclosed homes.
posted by jamaro at 1:55 PM on January 13, 2009

Hey, Californian here. You don't say what city or county they're in (Sacramento?), but there ARE city- and county-level resources here for tenants of foreclosed houses. I can't comment on the legality of the bank trying to evict your folks in particular, but the banks do not always have the right to do this and you should really check in with legal aid, or something similar, in their area.
posted by rkent at 2:10 PM on January 13, 2009

Yes we are in Sacramento...

Thanks for all of the answers...that's interesting about that Fannie Mae policy...not sure which bank holds the note though...we can find out.

We will definitely check out the local laws through a clinic or attorney asap...

When I said 'house full of crap' I guess I should rephrase that...it's all good stuff...just 21 years of furniture and stuff like that. but yes they could afford to downsize a little...especially since they need a smaller place anyway.
posted by AltReality at 4:20 PM on January 13, 2009

If they start reporting income to the IRS, they can then show that they have that income to become eligible for an apartment lease. Have they considered this?
posted by Houstonian at 5:33 PM on January 13, 2009

you maybe don't need to hear this, i'm sure you are adequately stressed about the situation, but i would really avoid underestimating the time and stress of packing and moving a house full of 21-years of stuff plus two teenage daughters. it took my parents like 5 months to totally move out of their house of 21 years and they were exhausted for like a year after. like i said, maybe you're already doing this, but you need to get that shit packed up and moving to one of you or your siblings garages or temporary storage because i'm guessing it is going to take a long time to find a suitable housing situation with little income.

hopefully you'll be able to extend the move-out date, but it is inevitable so the sooner you start the process, the less traumatic i think.
posted by dahliachewswell at 5:42 PM on January 13, 2009

Thanks Houstonian...we are aware of that and it's something they intend to start doing, but they haven't been reporting it because they wouldn't have been able to afford the rent and food if they did. One of the side jobs is actually being reported, but it's under someone elses name, and they are paying the taxes on it (by choice, nothing sneaky going on there)...

Thanks dahliachewswell...we imagine it's going to be a big pain in the butt to move...we're thinking about temporary storage...not sure how that will work. We're hoping they will get a tax return for the things they are claiming plus disability and unemployment that was claimed over the last year...but who knows.
posted by AltReality at 6:01 PM on January 13, 2009

They should contact their local rent-control board. California's laws are set to protect renters, especially those getting screwed in situations like this.

I found myself in this exact scenario about a year ago. I learned my rights from the rent-control board, and then called the bank. Said I'm willing to work with them and to move out, however I need more time (and I shouldn't be the one penalized with hurry-up eviction, since I'm the innocent bystander in this). Because I was rather stubborn about it and I demonstrated that I knew the law (nicely, of course), I was put in contact with the decision-makers. Ultimately they let me stay on for two months, rent-free! Plenty of time to get my move sorted, and a financial bonus to boot.
posted by oceanmorning at 9:19 PM on January 13, 2009

I just found out they are being offered a 'Keys for cash' settlement sort of thing in which they don't pay rent for the this month, and they are given something like 4K to move out. So that will help with a security deposit....and I found out the job that she does that the taxes are being paid on can be proven with bank statements.....my sister has the job but contracts it out to our mom...and pays her most of the money...so that's something.

And they have a family friend that is into real-estate....he may buy it from the bank after they fix it up, and then rent it to them again. We'll see.

Still...finding someone to rent from is the main problem
posted by AltReality at 11:49 PM on January 13, 2009

I've rented from two individuals, neither of whom required a credit check. In the first situation, I moved into a place that my roommate had lived in for a long long time, and in the second, I had a name to drop. What sold my second landlord, however, was the recommendation from the first.

I can't promise you that individual landlords won't ask for a credit check. But your folks lived in a place for 21 years, and the former owner/neighbor should be able to give a good recommendation. I presume that 21 years = good tenants, and that probably goes farther than you think. This is especially true if they can swing a satisfactory security deposit. The neighbor might feel bad about the situation and go out of their way to wax poetic about how great your parents are.

Another option is for someone in the family to sign on as a guarantor, which is ultimately what my dad had to do for my very first apartment (in a big building run by a management company). Only you guys can decide whether that's a risk you want to run given your particular financial situations.

Oh, and bonus points if someone you know knows a small landlord, because dropping a name can make a difference. For me, it got the security deposit halved and a $100 a month knocked off the rent. It also gives you a scoop on potential problems with the landlord. Best of luck to your folks.
posted by averyoldworld at 12:19 PM on January 15, 2009