When renter pays, owner doesn’t: You’re out, tenant

Leila Navidi

Wyant puts a sticker on the door of a foreclosed home while executing evictions. Some renters in the Las Vegas Valley have been forced to move from more than one home in recent years because of foreclosures.

By Abigail Goldman (contact)

Sunday, July 27, 2008 | 2 a.m.

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Leila Navidi

Deputy Constable Robert Wyant says he and his colleagues sometimes find empty houses when serving eviction notices, but they have also encountered angry people.

Constables deliver bad news at their peril

The six senior citizens were strung to IV drips in a Henderson home converted into a geriatric care facility.

The hospice home, a big stucco beast, was leased. The tenants, a couple who cared for the aging adults, never missed a rent payment. The owner of the house, however, was hardly so diligent. He lived outside the state and beyond his means. He stopped paying the mortgage and never said a word.

Hello, foreclosure.

Henderson deputy constables went to the home in March 2007 with a judge’s order: Everybody out. Even the seniors sinking into their sheets had to clear out — within 24 hours. The bank wanted its house back, like, now. This was the first anybody in the home had heard of the foreclosure.

Ambulances were called to transport the elderly evictees. Temporary housing had to be hustled up overnight. Last-minute medical specialists had to be hired.

The whole thing made your stomach turn, Henderson Constable Deputy Director Stephen Kilgore said.

It’s one of the more extreme examples, but short-notice, surprise renter evictions — many of which involve orders to vacate within three days — have become increasingly common in the Las Vegas Valley during the past year. Lots of people are trying to come up with solutions, ways to lessen the pain or at least a more reasonable system, but it’s likely to get worse before it gets better.

Consider the numbers:

• Half of Nevada’s 18,220 home foreclosures from October 2007 to January had mailing addresses that didn’t match those of the foreclosed properties — an indication they were rentals, according to RealtyTrac.com.

• The state had the country’s highest foreclosure rate in the first quarter of 2008, almost four times the national average. Las Vegas, meanwhile, had the third-highest foreclosure rate for metropolitan areas — one in every 44 households.

• An average of 43 houses were foreclosed every day in June in the Las Vegas Valley, according to research company Applied Analysis.

Now connect the dots: Approximately one quarter of houses in the valley are leased.

Renters, the very people who shouldn’t have to worry about mortgages, are being blindsided and bruised by the mortgage crisis. This is because of a glitch in the system, flaws in the foreclosure process that stack up and topple, sending surprise evictions into motion and renters onto the street.

Tenant advocates, constables, politicians and bankers all say minor changes to the law might make big improvements.

The Legislative Commission Subcommittee on Mortgage Lending and Housing, a group researching legislation to protect renters, is planning to draft legislation that would make it a felony for homeowners to hide looming foreclosures from renters.

“We are very serious about prosecuting this type of activity as fraud,” said subcommittee member Sen. Warren Hardy, R-Las Vegas. “You will see us come down really hard on that.”

But such a change can’t be made until the next legislative session, eight months away.

Meanwhile, renters continue to be uprooted, punished for another person’s problems.

•••

So how did renters get dragged into it?

First, homeowners who rent their properties don’t have to tell tenants about impending foreclosures.

Second, banks mail mortgage default letters only to the address homeowners provide, meaning if your landlord lives in California, she has been getting notices for months, but nobody has sent a single letter to the home in foreclosure.

Third, the lender that ultimately inherits the home isn’t aware there are renters, or doesn’t care, and seizes the house as if it’s occupied by a homeowner who knows better. Everybody out — the bank doesn’t want to be your landlord.

But the really insidious stuff starts three to six months before a foreclosure is finalized, when the homeowner knows he’s not paying the mortgage, knows he’s losing the house — and still collects rent as if nothing’s wrong. On June 2, members of the Subcommittee on Mortgage Lending heard testimony from Deputy Director Kilgore, who shared the geriatric home horror story.

There are also plenty of valley renters who have been hustled from home to home.

Tresia Chesley, 44, was booted from three houses in 2 1/2 years. She moved to North Las Vegas in November 2005. She spent 19 months in her first house before the constables came knocking.

She moved to another house, and nine months later, the bank foreclosed on the property.

Chesley did a background check on the owner of the next house she rented. He swore his finances were in order. She moved in on April 1 and found a mortgage default notice in the mail 10 days later.

This is often the only hint a renter gets — bank letters get back to the house, or bankruptcy attorneys send junk mail.

Nevada Legal Services has helped Chesley and a number of other Clark County residents in the same situation. Three years ago, managing attorney James Vilt got maybe one of these cases a week. These days, he gets about 45.

Vilt gives everybody the same mix of good and bad news: You have more time than you think, but not much. Renters can request a court hearing, which will take about three weeks to schedule and will result in a judge’s telling them to move out. It’s a stalling tactic. Suing is fruitless because the homeowner probably can’t pay up.

“People are stuck with a system that’s flawed,” Vilt said. “A lot of people freak out and leave. They pack up their stuff. They panic.”

•••

Here’s the magic solution, maybe: Post foreclosure notices at the actual home. Have a constable come by and nail it to the door, not three days before the foreclosure, but 90 days before, or more. Simple enough, and agreeable to multiple members of the Subcommittee on Mortgage Lending and Housing. Even the bank lobbyists, who acknowledge the cost to post the notice would come out of the banks’ pockets, are OK with a warning, if only because it might dissuade an angry tenant from, say, arson or some rage-inspired variation.

But there are other, more complicated variables to be considered, such as whether a homeowner who quietly collects the rent is committing a criminal act, said Assemblyman Marcus Conklin, chairman of the subcommittee.

Then there are questions of just how much time a renter is entitled to. Some think that even if a renter gets 90 days’ notice, he should still get more than three days to move when the foreclosure is final. Not everyone agrees.

Banks are willing to give more notice, but once that letter is posted, people should start making plans, said Bill Uffelman, president and chief executive of the Nevada Bankers Association. Bankers don’t want to be saddled with a property they can sell — not that anyone’s buying.

Then there’s talk of giving renters more access to their landlord’s financial status. It would be nice for a tenant like Chesley, who’s not the only person in Clark County with a kicked-out-three-times story. But opening up those financial records might be a breach of privacy rights, Uffelman said.

Moreover, even more basic issues have yet to be addressed. For example: What if a landlord tells his tenant the house is being foreclosed on, but holds that tenant to his lease? This presents a whole new set of laws to be explored. Can’t someone create a legal clause that allows renters who are foreclosed on to break their leases, and get their deposits back, no questions asked?

The answer is hardly satisfying: Stay tuned until February, when the Legislature is in session.

“The problem is that we meet once every other year,” Conklin said. “No one could possibly have foreseen the depth of this problem in advance, although it certainly feels like somebody should have.”

Discussion: 7 comments so far…

Comments are moderated by Las Vegas Sun editors. Our goal is not to limit the discussion, but rather to elevate it. Comments should be relevant and contain no abusive language. Comments that are off-topic, vulgar, profane or include personal attacks will be removed. Full comments policy.

By true_rebel_fan

July 27, 2008

7:28 a.m.

Suggest removal

hey renters -- DO NOT MOVE! when the bank comes back to the property to change the locks, if you're still living there a court date will be set. when you go to court, prove to the judge that you honored the lease agreement -- you are the victim -- you have been frauded out of your money. the judge can allow you to stay in the property, until, you are able to get your things in order. i've seen it when the banks will allow you to stay in the property rent free, until, it's sold. they do not want to deal with an abandoned home.
By jfnance32

July 27, 2008

10:57 a.m.

Suggest removal

True_rebel post probably is true but renters should contact a lawyer first.

If you are very poor then you should call the Boyd School of Law. They may get you some free advice from their school clinic.

Or you may contact:

Nevada
Nevada Legal Services, Inc.
530 South 6th Street
Las Vegas , NV 89101
Call: (866) 432-0404

Web URL: http://www.lawhelp.org/nv/

If you are a senior citizen then you may get free legal services from

http://www.lasvegasnevada.gov/TextOnly/F...
By true_rebel_fan

July 27, 2008

3:16 p.m.

Suggest removal

good idea jfnance.

RENTERS PROTECT YOURSELVES!

renters can find out if their rental is in foreclosure by calling the Clark County Recorders Office at (702)455-4336
By shameonvegas

July 28, 2008

12:02 a.m.

Suggest removal

This is typical where our voted in politicians don't give a damn about the locals. It's all about the strip resorts and what they want, then there is action immediately.. Wait to February are they kidding. How about looking after the good citizens who make the Strip work and have a special emergency session to stop this terrible problem. I guess our wonderful legislators are to busy thinking up more brilliant
things like our useless $800 million toy train which will surely be in bankruptcy within a yr. or two, then the real facts will come out and we locals get stuck with the financial burden. Next time build a monorail down Maryland and let the tourist walk another mile or two to the strip.
If our useless politician didn't immediately put in jail the owners of those clinics that where KILLING our fellow citizens, do we really think they know how to protects us when it comes to renters rights or just about anything else. I can go on forever but just got nailed with a jaywalking ticket while on my Blackberry.
By azsk8fan

July 29, 2008

5:47 a.m.

Suggest removal

I think what these homeowners do to renters when they collect the rent and then not bother to make their mortgage payment borders on fraud and is criminal by its' very nature. At the very least the homeowner should be made to pay whatever it costs for the renters relocation and possibly even face some kind of criminal charges. Homeowners who engage in ripping off the renter by not making their mortgage payment are low-life criminals.
By lisabella23

March 3, 2009

11:55 a.m.

Suggest removal

I was blind sided by a landlord not telling me about the house going into foreclosure, I found out by someone sticking the notice through the door. when I confronted the landlord, she just said she was one month behind and working something out with the bank. It makes me mad that I paid her rent every month and she didn't pay the mortgage. I decided to move my family to an apartment, since I don't trust renting a house anymore and informed the landlord that we moved and we still needed to go back to the house to close up loose ends. When we returned to the house, she changed the locks and now our personal items are left inside. She is also threatening to file eviction. WOW, it is amazing to me that these people are getting away with this. Why don't we have rights NOW? Why are these landlords able to do this? I couldn't get my things, couldn't clean up the house. So she ends up keeping my deposit.
By sandiw

Oct. 22, 2009

4:27 p.m.

Suggest removal

My family members became a victim for the 2nd time this year. This time in the middle of August it started with people coming to the door saying they bought the home at auction, asked to see the inside & that they would continue renting to them so could they see the inside. Then at the end of the month they said they wanted them out in 3 days or to pay enormous fees exceeding 3,000. When they explained they could not, the agent proceeded to change utilities into their name & even though the county recorders office showed no changes to ownership the utility companies did so without notification and NV Power held out for one week before switching it back. Then the agent for the "new owner" who would not provide verifiable contact numbers or names except to an unoccupied place of business hired an air conditioning company to come out and physically take the air conditioning unit out paying no mind to an 84 year old vet being one of the renters. The police were called and they advise the air conditioning company to re-install the unit or face jail, that night my family received a threatening phone call saying he would make sure my family would be out by the next day. Prior to these events with the utilities the original landlord called asking if he could pick up the rent early on the 3rd of September instead of his usual 5th day of the month. When he found out what was going on he refused to return calls. After the air conditioning issue my family went to Legal Aid who advised them step by step what to do and they followed through including not providing further monies to anyone until after the court hearing, which at the court hearing the judge listened to everything that the new owner said (alot of it being untrue) but when it came time for my family to talk all they were allowed to say by the judge was to answer if they where prepared to pay the months rent or not, if they could not they would have 3 days to move out. They also filed a extension notice which was denied on the very day they requested it. To make matters worse they now have an eviction on their record. What are renters to do if they do the right thing but are still treated in this manner, not only by the landlords and banks but also the courts?