What Every Renter in Massachusetts Should Know in This Foreclosure Crisis
By
Dawn D. Hicks
Community Affairs Analyst
Public & Community Affairs Department
In the midst of the country’s economic troubles resulting from foreclosures and the failing housing market, families renting units in foreclosed properties often get caught in the crossfire. Many are able to pay their rent but are finding themselves ejected into homelessness because their landlords could not pay the mortgage.
In October of 2007, in a speech to the Portland Chamber of Commerce in Portland, Maine, Federal Reserve Bank of Boston President and CEO Eric Rosengren reported that 27 percent of foreclosures in Middlesex County, Massachusetts, were multifamily homes, “highlight(ing) a potentially serious problem for tenants, who may not have known the owner might be in a precarious financial position.” From January to August of 2007, there were 7,585 foreclosures in just 27 cities and towns throughout Massachusetts. Of those foreclosures, 3,022 were multifamily homes, which, depending on the number of units per home, means that between 6,044 and 9,066 actual families faced homelessness.[Footnote 1]
What most renters do not realize is that although their landlord may be losing the house, renters still have rights; there are state laws in place and more on the horizon to ensure that tenants are protected even when the landlord’s property is foreclosed upon.
As a renter, you should know:
Tenants’ Rights | Tenant Responsibilities | Landlord Responsibilities
Federal Legislation on the Horizon | Resources | Footnotes
Tenants’ Rights
Tenant Responsibilities
- As a tenant of a foreclosed property, you are required to pay rent to the new owner. You can find out who the new property owner is through the Registry of Deeds or the local tax assessor’s office.
- Send your new landlord a letter offering to pay rent and asking where it should be sent. Make sure you have proof of the true landlord before you pay.
- If the new landlord does not accept your rent, keep a record of his or her refusal, and put the money in a separate account for proof of your attempts to pay.
- Although you have a new landlord, you still must abide by the contractual agreement of your lease or the expectations of a tenant-at-will.
- If you have a rental subsidy (such as Section 8), inform the subsidy agency of the change in ownership so they do not continue to pay the old landlord.
- Keep copies of all correspondence, communication, and transactions for your records.
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Landlord Responsibilities
- The new landlord is responsible for maintaining the property and keeping it habitable.
- The new landlord is responsible for the water bill and utilities if that requirement is in your current lease.
- If the new landlord does not respond to your written request for repairs or other services that he or she is responsible for, you can contact your local inspectional services department or the attorney general to file a complaint.[Footnote 7]
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Federal Legislation on the Horizon
- Congress presented The Mortgage Reform and Anti-Predatory Lending Act of 2007 (House Bill 3915 which passed the House in July of 2008 and is currently in Senate committee) to provide protection for renters so that they receive proper notification and are given time to relocate before the home they rent is foreclosed upon (http://www.opencongress.org/bill/110-h3915/show). This bill is Sponsored by Representative Brad Miller of North Carolina and co-sponsored by 27 members of Congress.
- Senate Bill 3034, Protecting Tenants at Foreclosure Act of 2008, would give the tenant at least 90 days to vacate the premises of a foreclosed property before eviction proceedings could begin. Also, any tenant with a lease before foreclosure could stay on the premises until the end of that lease. If, however, the new owner will occupy the unit as a primary residence, the leased tenant would be given 90-day notice to vacate the premises (http://www.opencongress.org/bill/110-s3034/show). The bill is sponsored by Senator John Kerry and co-sponsored by Senator Edward Kennedy of Massachusetts.
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Resources
There are services available to help renters who are caught in the midst of this foreclosure crisis. Contact any one of the following for guidance:
Legal representation is suggested for any tenant experiencing eviction/court proceedings regarding a foreclosed property.
There are free legal service agencies (http://www.masslegalservices.org/perl/services.cgi) willing to represent low-income tenants in Massachusetts who may be displaced as a result of foreclosure.
See related brochure, “What Every Tenant in Massachusetts Should Know in This Foreclosure Crisis.”
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Footnotes
Footnote 1: Lee, Kai-yan (2008). “Updates on Foreclosures, Subprime ARM Resets, and Mortgage Delinquency in New England,” presentation at the CAFCA /MASSCAP / RICAA 2008 Annual Conference (May 5, 2008).
Rosengren, Eric (2007, October). “Recent developments in real estate, financial markets, and the economy,” speech to the Portland Regional Chamber of Commerce, Portland, Maine. http://www.bos.frb.org/news/speeches/rosengren/2007/101007.htm
Footnote 2: A tenant-at-will is one who rents an apartment on a month-to-month basis without a lease via verbal or written agreement between the landlord and the tenant.
Footnote 3: Mass General Laws, Chapter 186, Section 13.
Footnote 4: Mass General Laws, Chapter 186, Section 13A.
Footnote 5: State subsidized tenants have even more rights and protections. Massachusetts joined New Hampshire, New Jersey, and Washington, D.C., in implementing legislation stating that Section 8 lease-holding tenants cannot be evicted by the new landlord before the current lease ends unless the tenant fails to pay rent or violates any terms of the contract. “Foreclosure shall not affect the tenancy agreement of a tenant whose rental payment is subsidized under state or federal law.” (MGL, Chapter 186, Section 13A). For more information, see Portman, Janet (2008). “Renters in foreclosure: what are their rights?” Nolo web site, http://www.nolo.com/article.cfm/objectId/B8CE60DC-0D00-4E6B-8DC71AF1165C89EA/104/138/139/ART/.
Footnote 6: “Cash for keys” is a process in which the owner offers the tenants money to move out. Unfortunately, the dollar amount is often not enough to cover moving expenses.
Footnote 7: Boston residents can contact Inspectional Services Department, 1010 Massachusetts Avenue, 5th Floor, Boston, MA, (617) 635-5300. The Massachusetts Office of the Attorney General can be reached at 1 Ashburton Place, Boston, MA, (617) 727-2200. There are many branch offices throughout the state.
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