Ridgecrest ordinance to help renters in foreclosed property

Tuesday, August 25, 2009
Courtenay Edelhart
Bakersfield.com

In the aftermath of a real estate debacle that put about 300 tenants at risk of eviction, the city of Ridgecrest has become the first in Kern County to pass an ordinance to protect renters of foreclosed homes.

The ordinance, which takes effect Sept. 19, sets forth a set of conditions that must be met before renters can be evicted from foreclosed property. If the renter is behind on rent, in violation of covenants, or is using the property for illegal purposes, among other things, the renter can be kicked out.

The law also mandates the new landlord pay relocation assistance to renters displaced through no fault of their own.

The rule will only last a year.

"This really grew out of a very unique set of circumstances, and might not even have passed if it weren't for that problem," said Ridgecrest City Manager Mike Avery.

The "problem" was Jim McConville, owner of Diamond House Development in Fremont, which purchased condominiums in investors' names in exchange for a fee or a share in rental income profits, according to Avery.

But McConville failed to make mortgage payments on La Mirage in Ridgecrest and other properties around the state, so the homes were foreclosed, Avery said.

McConville could not be reached for comment.

About 300 La Mirage renters would have lost their homes all at once if the city of Ridgecrest hadn't done something, Avery said.

Ridgecrest is among more than a dozen cities statewide that have passed so-called Just Cause for Eviction Laws since the real estate market tanked.

Bakersfield isn't one of them, but foreclosure is a big problem here.

There were 730 foreclosures in Kern County in July, and 1,364 default notices were filed that month, according to the Kern County Assessor-Recorder's Office.

Earlier this month, First American CoreLogic reported that owners of more than half of all mortgaged homes in Bakersfield are upside down on their loans.

Just Cause for Eviction ordinances in other cities range in scope from giving renters a minimum amount of time to find somewhere else to live to allowing them to complete their leases unless they have violated rental agreement terms.

The federal Helping Families Save Their Homes Act signed into law in May requires honoring existing leases, or in the case of month-to-month leases sets a minimum of 90 days' eviction notice.

Two bills are pending at the state level that address the issue, too.

The American Bankers Association hasn't taken a position on California's local ordinances, said general counsel Mathew Street.

Different lenders have different needs, he said. Some would prefer to have tenants paying for and maintaining property that would otherwise sit empty. Others want homes vacated immediately so they can be sold.

"It's hard to generalize," Street said. "It depends on the holder."

But Tenants Together, a San Francisco-based renters' advocacy group, says such ordinances are badly needed and is lobbying other cities to adopt them.

"They're effective as a means of at least providing a defense for renters if they want to take an owner to court," said executive director Dean Preston.

"People who haven't done anything wrong, who have paid their rent on time, need to have some protection." 

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