ST LOUIS, MO - Many real estate investors — just like many homeowners — are having a hard time making mortgage payments on their properties. But when the foreclosure hammer falls on an apartment house, several families, not just one, might find themselves on the curb.
Even tenants who are current on their rent — indeed, even those with perfect payment records — are at the mercy of high bidders. Laws allow a new owner to put out existing tenants immediately after the foreclosure sale. Lease agreements no longer are binding. The tenants have no rights and can be evicted without notice or any due process.
That's the way banks and bottom feeders like it.
We understand why new owners might want to rid themselves of deadbeat tenants. But why would the purchaser of a multifamily building in foreclosure be in such a big hurry to empty the premises of solid tenants?
Often a bank or note holder ends up "bidding in" the property at the foreclosure sale, because other bidders make lowball offers at best. The bank or investor may have no appetite or aptitude for managing rental property. Instead, it may prefer to empty the building and market it without the headaches of repairs and upkeep.
The Missouri Legislature had a chance to give some modest protection to innocent tenants who find themselves caught up in their landlords' financial problems. Unfortunately, tenants usually don't make campaign contributions. Bankers and real estate companies do.
Senate Bill 469 would have required that tenants be given 20 days notice in advance of a foreclosure sale and then be given 45 days to find new lodging before eviction proceedings could be brought. It's stewing in committee.
House Bill 753 would have provided tenants 90 days notice of any foreclosure sale. It got rolled into a Draconian bill backed by lobbyists for banks and real estate investors. That bill, HB 836, passed the House and has been favorably reported by a Senate committee.
It would give tenants just 10 business days to clear out of apartments in foreclosed properties. If a law-abiding tenant can't find a new place and come up with a security deposit within the allotted time — tough.
A key lawmaker has confirmed that banking groups won't support and will work to kill any bill that gives tenants more than 10 days notice. In other words, no mercy.
If that's the way Missouri's banking and real estate interests want to play it, local communities should take notice.
Vacant rental properties can become terrible public nuisances. They may deteriorate quickly. Without the watchful eyes of good tenants, they may become the subject of vandalism or staging grounds for criminal activity.
Strict code enforcement is the solution. That means municipal officials establishing policies for dealing with foreclosed multifamily buildings. Inspections should be scheduled promptly after a foreclosure sale. Buildings should be reinspected on a regular basis when they are left vacant. Absentee owners should be required to correct deficiencies promptly. Ten days seems about right.
Owners of foreclosed properties understandably want to exploit the full benefits of the law. But the community also has the right to protect its interests — without mercy.
Source: STLtoday.com