tenants in foreclosure training
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Tenants in Foreclosure Training. Center for Disability & Elder Law July 15, 2014. Part 1: Eviction. About Eviction Court. 3 0,000 evictions filed each year in Cook County 95% of tenants appear pro se Landlords are three times more likely to obtain an eviction order if a tenant is pro se - PowerPoint PPT PresentationTRANSCRIPT
Tenants in Foreclosure Training
Center for Disability & Elder Law
July 15, 2014
Part 1: Eviction
EvictionTenants in
Foreclosure: Policy Concerns
Tenants in Foreclosure:
Legal Protections
Tenants in Foreclosure:
Practical Application
About Eviction Court
• 30,000 evictions filed each year in Cook County• 95% of tenants appear pro se• Landlords are three times more likely to obtain an eviction
order if a tenant is pro se• Average pro se tenant’s trial lasts < 2 minutes• Routine denial of tenants’ due process rights
• Tenants not allowed to present defenses• Witnesses not sworn in when testifying• Judges not examining eviction notices• Denying or limiting discovery rights
From LCBH’s 2003 report No Time for Justice
Landlord-Tenant Laws
FEDERAL ILLINOIS CHICAGOProtecting Tenants at Foreclosure Act(Pub. L. 111-22, Div. A, Title VII, May 20, 2009)
Forcible Entry and Detainer Act (735 ILCS 5/9-101 et seq)
Residential Landlord and Tenant Ordinance(Chicago Municipal Code, Chapter 5-12)
Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1102)
Keep Chicago Renting Ordinance (Chicago Municipal Code, Chapter 5-14)
Part 2: Policy Concerns
EvictionTenants in
Foreclosure: Policy Concerns
Tenants in Foreclosure:
Legal Protections
Tenants in Foreclosure:
Practical Application
Foreclosure Filing Data 2009-2013
• From 2009-2013, 22,674 apartment buildings have entered foreclosure, impacting 68,300 housing units.
• 2013 witnessed a 37% decrease in foreclosure filings from 2012, with a total of 2,758 apartment buildings entering foreclosure, affecting 7,704 units.
Foreclosure Filing Data 2009-2013
• The geography of foreclosure remains unbalanced across Chicago.
• The10 community areas with the highest number of units impacted by foreclosure in 2013 are located on either the South or West sides of the city.
• These communities have had an average of 21.2% of their rental housing units impacted by foreclosure since 2009.
• This is double the average rate of rental unit foreclosures for the City of Chicago.
Foreclosure Sales and Bank Practices
• Over the past five years, only 10% of the banks and other financial institutions filing foreclosures were responsible for 90% of all foreclosures on apartment buildings.
• 83% of foreclosure sales result in bank-ownership.
• Banks choose to vacate properties as quickly as possible.• Constructive eviction• About 1 in 10 eviction cases are foreclosure-related in Chicago
Foreclosure: Impact on Renters
• LCBH conducted a survey as part of the 2012 annual report.
• LCBH reached 55 tenants out of 233 contacted.
• The majority of renters LCBH contacted in the follow-up survey were forced to leave their homes as a direct result of a foreclosure.
• 3 main issues were highlighted in the report
Paying Rent Deteriorating Conditions Eviction Threats
Unclear Rights Unclear Responsibilities Bad Notices
Cash for Keys Offers
LCBH documents common renter problems:
LCBH Survey Project:
Foreclosure Impacts Children
• Research has shown that changing schools is associated with a wide array of problems including:
– emotional and behavioral: illicit drug use, depression, and teen pregnancy
– academic: dropout, lower math and reading scores
Foreclosure Impacts Families
• Displaced families often face housing instability and end up in shelters or doubling-up with family or friends– On average, families spend
7 months in temporary housing
• Places burdens on the receiving households as well as municipal services and charity organizations
Foreclosure Impacts Finances
• Studies show from 2000 to 2010, the percentage of households allocating more than 30% of their income to rent rose from 11.1 percent to 46.5 percent.
Foreclosure Impacts Finances
• Studies show from 2000 to 2010, the percentage of households allocating more than 30% of their income to rent rose from 11.1 percent to 46.5 percent.
Community Impact: Vacant Properties
LCBH report released in April of 2013:Vacant Properties: Havens for crime in a city plagued by violence
• Increase in vacant properties due to foreclosure
• Chicago has experienced an increase in vacant housing units from 7.9% of the total housing stock in 2000 to 12.5% in 2010
• In Chicago, about 70% of vacant properties are the result of foreclosure
• In 2011 alone, Chicago had 15,000 properties registered as vacant or “abandoned” according to city data
Community Impact: Vacant Properties
Chicago police data shows that crime associated with vacant properties has increased dramatically:
• From 2005-2012, reported crimes in abandoned buildings and vacant lots increased by 48%;
• Three times as many reported crimes occurred in abandoned buildings in 2012 than in 2005, a 196% increase;
• In 2012, a total of 2,618 crimes occurred in abandoned buildings or vacant lots: – 7 reported crimes per day, on average – 3 reported criminal sexual assaults and 4 weapons violations per month, on
average.
Citywide Impact
• Disinvestment and loss of population on Chicago’s South and West Sides.
• Gentrification and increasing rental demand.• Impact on affordability.
• According to the U.S. Census Bureau, an 23% of Chicagoans—over half a million people—lived below the federal poverty line in 2010.
• According to the National Low Income Housing Coalition, a person employed full-time in Cook County must earn $18.42 an hour to afford a two-bedroom apartment—the current minimum wage is less than half that at $8.25
Part 3: Legal Protections
EvictionTenants in
Foreclosure: Policy Concerns
Tenants in Foreclosure:
Legal Protections
Tenants in Foreclosure:
Practical Application
Foreclosure Timeline
Common Problems
Paying Rent Deteriorating Conditions Eviction Threats
Unclear Rights Unclear Responsibilities Bad Notices
Cash for Keys Offers
Rights and Responsibilities
Foreclosure
Pending
Landlord responsibilities:• Collect rent • Maintain
property• Hold
security deposit
• Notice of Foreclosure (RLTO)
• Follow FED eviction procedures
• Alert the tenant to the foreclosure (Chicago only)
• *If a receiver is appointed by the foreclosure court, it takes over many duties of the landlord*
Tenant responsibilities:• Pay rent• Follow
terms of lease
Foreclosure
Complete
Bank/New Owner Responsibilities:• Collect rent• Maintain
property• Hold security
deposit (RLTO)
• Change in Ownership Notice (IMFL)
• Follow FED eviction procedures
Tenant responsibilities:• Pay rent
(after proper notice)
• Save rent (if unsure who to pay)
• Follow terms of lease
• MOST TENANT IN FORECLOSURE PROTECTIONS TRIGGERED AT THE ORDER CONFIRMING SALE
Protecting Tenants At Foreclosure
• Federal law: Passed in 2009 • 90 day notice for “bona fide” tenants• “Bona fide” lease term survives (including subsidies)
1. Tenant is not child, parent, or spouse of mortgagor2. Arms length transaction3. Rent is not substantially less than fair market value
• Schedule to sunset at end of 2014
Key Points:
Illinois Mortgage Foreclosure Law
Key Points:
• State law: Governs all foreclosures in Illinois• Change in management/ownership notice all tenants• 90 day notice for “bona fide” tenants• “Bona fide” lease (not just the term) survives
1. Tenant is not child, parent, or spouse of mortgagor(Unlike PTFA, this is a rebuttable presumption)
2. Arms length transaction3. Rent is not substantially less than fair market value
• Lease term restrictions (effective after PTFA sunsets)• Provides for sealing of foreclosure-related eviction records
Keep Chicago RentingOrdinance
• City ordinance: Effective September 24, 2013• Notice to all tenants informing them of their rights
• Penalty: actual damages and attorney’s fees• Qualified tenants: Offered either lease renewal OR $10,600
relocation assistance (bank’s choice, not the tenant’s)1. Tenant is not child, parent, or spouse of mortgagor2. Arms length transaction3. Rent is not substantially less than fair market value• Penalty: double relocation assistance and attorney’s fees
Key Points:
Renewal v. Relocation
Lease Renewal Details Relocation Assistance Details
Applies to both written and oral leases $10,600 to be paid within 7 days after tenant vacates the property
Existing terms apply to lease renewal (can still be evicted for cause)
Tenant not eligible if evicted for cause before assistance offered or paid
Must renew lease until property is sold to a third party
Tenant not eligible if offered lease renewal, but rejects it
Cap on annual rental increase (2%)
If renewal is rejected, owner can evict at end of lease or end of 90 day notice (whichever is longer)
Summary of Law
Protecting Tenants at Foreclosure (PTFA)
Illinois Mortgage Foreclosure Law (IMFL)
Keep Chicago Renting Ordinance (KCRO)
Bona fide lease term survives foreclosure in its entirety
Bona fide lease survives foreclosure, but may be shortened (post-PTFA)
All preceding protections plus:
Bona fide tenant entitled to 90 day notice
Bona fide tenant entitled to 90 day notice
All tenants entitled to KCRO notice required
Subsidized renters lease terms survive
Change of management/ownership notice for all tenants
Qualified tenants entitled to offer of lease renewal or relocation assistance
Sunsets December 31, 2014
Sealing of foreclosure-related eviction records
Sealing Court Records
• Why Seal?– Reported by various credit reporting agencies– Difficulty securing housing in the future– Barrier to some government housing subsidies
• How to Seal?– Discretionary (FEDA) 735 ILCS 5/9-121(b)– Mandatory (FEDA and IMFL) 735 ILCS 5/9-121(c) and 735
ILCS 5/15/1701– Most courtrooms have preprinted sealing orders
Three-Step Property Search
Step 1: Cook County Assessor’s Website
• Use address to get property PIN number
Step 2: Cook County Records of Deeds’ Website
• Use PIN number to find foreclosure case number
Step 3: Cook County Clerk of Court’s Website
• Look up status of foreclosure case• Is there a receiver? Is the case over? Was OP entered? Was Order Approving or Confirming Sale entered? When?
I found the case, now what?
Foreclosure NOT Complete
•Was a Receiver appointed?•Who?•When?•Change in Management notice?•No tenant if foreclosure protections apply yet!•TENANTS WHO FAIL TO PAY THE LANDLORD RENT RISK BEING EVICTED FOR NONPAYMENT OF RENT!
Foreclosure Complete
•Does PTFA apply?•Does IMFL apply?•Does KCRO apply?•Has tenant received a 90 day notice or KCRO notice?•Has tenant received a “cash for keys” offer?•Change in Management notice?•Is lease “bona fide?”
Wrap-Up
Summary! Comments? Cases?
Contact Us:Lacy Burpee
Tenants in Foreclosure Staff AttorneyEqual Justice Works Illinois Foreclosure Fellow
Phone: (312) 784-3518E-mail: [email protected]