Sober-Living Tenants Caught Off-Guard When Forced To Find New Homes

Saturday, July 12, 2008
Marty Graham
SignOnSanDiego.com

After four years of paying rent at the Lemon Grove sober-living complex he calls home, Michael LaBran and 11 other residents have been forced out by the company that bought the foreclosed property.

"The owner never let us know he was in foreclosure. He collected $30,000 in rent and didn't make a single payment," LaBran said.

LaBran and the other residents of the Foundations sober-living house said they didn't have anywhere to go and hadn't prepared for finding new homes.

"We want to stay together for the support when we're having problems," LaBran said.

EMC Inc., the Texas-based company that bought the house on Westview Place out of foreclosure, offered to pay the tenants $750 each to move out - if all the residents agreed. The residents decided to take the deal.

Meanwhile, the former owner has disappeared with the residents' security deposits.

Deborah Krznarich of EMC Inc. declined to comment on the sale, saying only that EMC had reached an agreement with the tenants at the property that had been owned by Patrick and Marla Varney.

The Varneys, who previously lived in Lemon Grove, could not be reached for comment. Phone numbers they left with the tenants do not work or have been disconnected. They left no forwarding address with the post office.

The Foundation's residents are part of a larger group of unseen and unprotected victims of the foreclosure crisis, said Gregory Knoll, executive director of the San Diego Legal Aid Society.

"Unlike the borrower, many renters have no idea there is a problem with their homes until someone shows up with an eviction notice," Knoll said. "Like most people in this situation, they have no legal rights and no effective recourse against anyone, and they're left scrambling for a new place to live."

San Diego County is seeing 50 foreclosures a day, according to DataQuick numbers, and there's no sign of a significant drop coming anytime soon. Experts estimate that at least one-third and as many as two-thirds of the foreclosed homes are rental homes owned by investors.

Janet Portman, an attorney with Nolo Press who specializes in landlord-tenant law, said most month-to-month tenants lose their legal protections when their homes change hands.

"People who are fine, upstanding, law-abiding tenants have the great misfortune of renting from someone who is unable to make his mortgage payments," Portman said. "With about 40 percent of the housing in foreclosure owned by investors, this is happening to tenants all over."

Banks don't consider keeping the tenants even if their rent will cover the mortgage.

"Banks are behaving like banks," she said. "In this market, they'd be better off hiring a property manager and keeping or putting tenants in place, but they don't want to be landlords."

Most of the residents at the Lemon Grove building are in recovery for drug or alcohol addiction. Four are receiving and living on disability payments, LaBran said. They've all been paying $450 a month to share one of three three-bedroom units with four other people.

Many of the residents at the home are what social workers call dual diagnosis, suffering some combination of addiction, mental illness or physical disability.

Both the home on Westview Place and another sober-living home on Massachusetts Avenue went into foreclosure last year, according to public records.

The Massachusetts Avenue property got the attention of the city of Lemon Grove because it became an ongoing code-enforcement problem, Lemon Grove City Manager Graham Mitchell said. As it went into foreclosure, no one was taking care of the house, and the city stepped in.

"We'll ask the bank to take care of the mowing and maintenance, or we'll do it and bill them," Mitchell said. "Letting things go hurts the whole neighborhood."

Because paying tenants remained in the Westview Place homes, there were no maintenance problems.

By May, when residents say the Varneys packed up and left, debt on the Westview Place property had grown to $939,000, according to property records. EMC bought it from the lender for $518,000 that month.

But none of this was clear to the tenants, including LaBran and Bret Volpi, who had continued to make rental payments.

After two months of worrying about their home breaking up, LaBran and several others from the home found shelter this week in another house on Westview Place. Volpi said he's found an apartment in Point Loma with a roommate.

"My roommate and I prayed about finding another home, and God came forward for us," he said.

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