Governor Signs Legislation Designed to Protect Tenants From Improper Post-Foreclosure Evictions

Friday, October 1, 2010
Tenants Together and California Reinvestment Coalition

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Yesterday, Governor Schwarzenegger signed Senate Bill 1149, a law that will empower tenants living in foreclosed properties to contest illegal evictions.  The law, authored by Ellen Corbett (D – San Leandro), and co-sponsored by the California Reinvestment Coalition, the Western Center on Law & Poverty, and California Rural Legal Assistance Foundation, protects tenants from negative credit impacts of post-foreclosure eviction cases.  The law also imposes new notice requirements on banks and other post-foreclosure owners that seek to displace tenants from their homes.  

The new law responds to the growing concern that thousands of tenants across the state of California are losing their homes and having their credit history damaged through no fault of their own.  Banks taking over foreclosed rental properties are notorious for evicting tenants in violation of the law.  Tenants are often shocked to learn that these bogus evictions can end up on their credit reports for years to come. These evictions can make it more difficult for tenants to secure housing in the future.  

SB 1149 changes existing law under which court eviction records become public and available to credit reporting companies unless a tenant prevails in the eviction case within sixty days.  Banks and other post-foreclosure owners have exploited the existing law by leaving bogus evictions pending past sixty days, scarring even the best tenant’s rental history with an eviction.  SB 1149 changes the timeline, providing that eviction records become public only if the post-foreclosure owner obtains judgment – proving that there are legitimate grounds for eviction -- within sixty days.  The new law will enable tenants to assert their rights without fear that doing so will damage their rental history.

In addition, SB 1149 requires that banks and other post-foreclosure owners include a cover sheet with the notice terminating tenancy to inform tenants of their rights and advise them to seek legal help.

Working closely with Tenants Together, the California Reinvestment Coalition co-sponsored this bill to protect tenants in foreclosure situations.  “We co-sponsored this bill to make sure that tenants in foreclosed properties would know their rights and could stand up for those rights,” commented Kevin Stein, Associate Director of the California Reinvestment Coalition, a coalition of 280 nonprofit organizations and public agencies across the State advocating for the right of low-income communities and communities of color to have fair and equal access to banking and other financial services.  Stein added: “The displacement of tenants after foreclosure is destroying the fabric of communities across the state.  We appreciate Senator Corbett’s leadership on this issue.”

According to a recent report by Tenants Together, California’s statewide organization for renters’ rights, at least 37% of residential units in foreclosure in California are rentals, directly affecting over 200,000 tenants each year.  Most of these tenants are displaced from their homes.  Although federal, state and local laws provide some protections for tenants in foreclosed properties, violations of these laws are rampant.  California’s Attorney General Jerry Brown recently launched an investigation into violations of tenant protection laws, noting that “tenants who live in properties in foreclosure are the forgotten victims of the collapse of the housing market.”

“As a practical matter, unless tenants can defend themselves from illegal evictions without fear of having their credit ruined, legal protections on the books are of limited value,” noted Dean Preston of Tenants Together.  “This law helps protect tenants who assert their rights.  We encourage tenants to get legal help and contest these bogus evictions.”

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