Earlier this year the Mercury News told the story of a dozen tenants crammed into a single home, being victimized by a landlord who was making thousands of dollars by continuing to rent rooms despite having lost the house to the bank in foreclosure.
As I discovered through my own experience, it's shocking not only what some landlords will do, but also how little protection state law offers people looking to rent a room, a house or an apartment. Fortunately, state Sen. Joe Simitian (D-Palo Alto) is working to arm prospective tenants with better information by authoring legislation, Senate Bill 1191, that would require landlords to inform prospective tenants that the property is subject to foreclosure.
From June 2011 to October 2011, I rented a duplex in the College Park area of San Jose. After four months, I was surprised to receive an email from the landlord telling me he was in the process of loan modification and "if the loan was not approved the duplex could be sold." He hoped, he said, that "things could work out for the best."
Having just moved, paid thousands in a deposit and furnished the place, I was frustrated. If the duplex was sold, the new owner would have the right to cancel my lease on three-months' notice per federal law. The landlord gave no indication of when he had entered loan remodification and brushed off my follow-up questions. My instincts told me my landlord was behaving illegally and needed to be held accountable.
What I found was astonishing: The Internet is full of horror stories of tenants moving into properties and quickly finding out that their home is up for auction. Tenants are also required to pay rent while the landlord may or may not be paying the mortgage, and most end up in Small Claims Court fighting to get their deposits back.
A quick search on the Santa Clara County website provided the property's Assessor's Parcel Number, which indicated my landlord was two years behind on property taxes. A few weeks later, I received a letter with a Trustee Sales Number for the property. After several failed attempts to gain information from the landlord, I contacted the firm the bank had hired to manage the foreclosure. They notified me that the property had been scheduled for auction multiple times in the past two years but had been postponed for arbitrary reasons, and there was no way to tell whether it would be postponed again.
Further research proved that what my landlord was doing was not illegal, just immoral. Currently in California, landlords are not required to disclose any information to prospective tenants about a notice of sale.
While widely seen as a supporter of tenants' rights, California lacks legislation that states and cities such as Oregon, Nevada, Arizona, Vermont, Chicago and Minneapolis have already enacted. They require that landlords disclose the foreclosure process to potential tenants and notify current tenants within a declared period of time.
With thousands of properties in California in foreclosure, stronger protections are needed for tenants. Simitian's bill would require a landlord who has received a notice of default to tell prospective tenants, and it would set penalties for failure to comply.
I hope the Legislature will pass SB 1191 and that the governor will sign it into law. While my rental ordeal is over, others around the state are still at risk.
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