Imagine coming home to your rental apartment to find a big foreclosure sign on the building. It's scary and it's happened to millions of renters, many of whom have been evicted during this crisis. However, what many don't realize is there are strong protections that can keep tenants in their homes long after the landlord is gone.
Joe Peay and Gretchen Zimmerman rent in San Francisco and the view is one of the main reasons they love this place.
"I love the view, I love where it is, I love that it's on Twin Peaks Hill," says Peay.
They also love the full kitchen, the built-in office, and the big airy living room. There's just one problem -- the bank just foreclosed on their place.
"When I got home, there was just a big sign on the house. I was like, 'OK what's that going to mean for us next?'" says Peay.
Peay and Zimmerman were worried the foreclosure could mean their one-year lease was no good and they were headed for eviction. However it turns out, tenants in foreclosures are in a much better position now than they may realize.
"The law is a little bit more, shall we say, a little kinder to tenants than it used to be," says former Superior Court judge and JAMS attorney and mediator David Garcia.
Garcia wrote a book on landlord and tenants rights and points to a federal law passed during the height of the foreclosure crisis, protecting tenants from sudden eviction.
"It's one thing for the owners of the property to be displaced, who are the ones defaulting on the loans. It's another thing for the people who are innocent, shall we say, who have bona fide rental agreements," says Garcia.
The federal act says tenants must receive 90 days notice before eviction. Also, tenants can stay in their homes at least until the end of their leases, unless a new owner wants to move in.
In cities with rent controls, like San Francisco, there are even more protections.
"Most tenants of course are pretty scared. They think they have to move and that it is a bank that owns my building now. So far, too many tenants unnecessarily have moved out," says Ted Gullicksen of the San Francisco Tenants Union..
Gullicksen says many renters are unaware their rights were actually strengthened because of the foreclosure crisis.
In addition to the federal act, San Francisco passed a new law saying banks that have foreclosed on a residential building cannot evict the tenants who continue paying rent. Even if the building is sold, the news owners must abide by the city's tough rent control laws.
In most cases, new owners may only evict if they intend to move into a particular unit or if the tenant breaches the rental agreement.
Which brings us back to Peay and Zimmerman, they have a one-year lease and the unit is rent controlled. So, it would take a lot to evict them. Even so, they had a very close call, because they had no idea who should receive the rent payment after foreclosure.
"Further notice came in the form of a courier ringing our doorbell last Thursday," says Peay.
It was a three-day notice from the bank. Pay rent or get out. Joe paid by overnight mail right away.
"Hopefully, we're in good shape. It's always a little scary, too," says Peay.
/" Many cities including Berkeley, Oakland and East Palo Alto, have their own rent control laws that can protect tenants from sudden eviction.