RENTERS - When Their Building is Foreclosed Upon, They Often Have to Leave!
AN ESTIMATED 2,800 APARTMENT BUILDINGS ACROSS CHICAGO FORECLOSED IN 2007 - LEAVING MANY TENANTS WITHOUT A HOME!
Here in Chicago, and elsewhere across the U.S., renters are becoming the unheralded victims of the foreclosure process. Often times, when the landlord's apartment building faces reversion to the bank, the landlord's tenants are faced with no choice but to find a new home - in most cases, without much notice.
According to the Harvard Joint Center for Housing Studies, approximately 14,000 properties faced foreclosure proceedings in the City of Chicago last year, up from 10,339 in 2006 - a 35% increase year-over-year. Approximately 20% were on rental properties, according to the survey.
"The problem is a lot of landlords aren't telling [tenants] about foreclosures. There's no law requiring landlords to tell them," says Hector Gamboa, of the Spanish Coalition for Housing, an agency that offers housing counseling for low- to moderate-income homeowners. Most often, the first time they hear about the foreclosure is when they receive a five-day notice from the lender who took back the building.
"There's not a lot that can be done to help someone once in a foreclosure situation," says Paul Bernstein, a Chicago attorney with a private practice. He is a board member and volunteer for the Metropolitan Tenants Organization in Chicago, a group dedicated to educating and organizing renters on decisions that affect the affordability and availability of housing.
An estimated 55 percent of Chicago residents live in 500,000 rental units, according to the tenants' group. If a homeowner loses his property to foreclosure, the renters often lose their rights as well.
"I'm surprised more lenders don't let renters [continue] to pay, but they prefer to get everyone out," Bernstein says, citing the cost and risk of operating a tenant-occupied property. Risks include the chance that remaining tenants will have their heat or electricity turned off, in turn causing material damage to the building. If the City of Chicago deems the property a hazard for occupancy, the lender will have to correct any violations promptly.
Banks rarely deal with building repair or maintenance issues until after foreclosure, when the bank takes control of the property. At that point, they would often rather secure the property from further damage rather than becoming a landlord.
Tenants got some breathing room earlier this year from the State of Illinois, who now requires landlords give tenants current on their rent payments a minimum of 120 days before they are forced to move out.
Another hardship for displaced tenants involve the return of security deposits. Several municipalities across Illinois, including Chicago, require timely repayment of tenant's security deposits after lease termination. If the landlord cannot be located after foreclosure, however, the security deposit is often lost.
Says Shannon Weiss, Chief Executive of the Renters' Right Center, an Evanston IL-based tenants rights advocacy group, "it's gotten worse in past eight years. I've never seen it this bad before."
For more information, read Anne Brennan's story in the Sunday, June 8th Chicago Tribune.
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