Calvin Stover assumed he would have a place to live as long as he paid rent, but that all changed Dec. 13 when a Benton County deputy forced him out of his north Springdale home.
“I was half asleep and thought I heard something but wasn’t sure,” Stover said.
What Stover heard was the deputy serving an eviction notice, joined by a locksmith, a bank representative and an animal control officer who was rounding up Stover’s five foxhounds.
“[The deputy] told me,‘Don’t say a word, just take what you need, what you can carry,’” Stover said. “So, I get my dogs and go.”
Stover is one of a growing number of renters evicted from their homes because the owner’s property is being foreclosed upon, said Linda Couch, senior vice president for policy and research at the National Low Income Housing Coalition, based in Washington D.C.
Couch said it’s difficult to determine how many renters have faced this situation, but her organization estimates 40 percent of U.S. homes going into foreclosure are occupiedby renters. Her organization is working to update its estimate, which is based on 2-year-old data, she said.
In 2011, there were an estimated 1.9 million homes that entered foreclosure, according to a report released last week by RealtyTrac Inc. of Irvine, Calif., which tracks housing sales.
Congress recognized the problem and passed the Protecting Tenants at Foreclosure Act, which President Barack Obama signed into law May 20, 2009, Couch said. The law established a minimum of 90 days for a renter to stay in the home after it is taken over by a new owner, she said.
Prior to enactment of the federal law, Arkansas tenants had no protection in foreclosures, said Marshall Prettyman, director of litigation for Legal Aid of Arkansas in Fayetteville.
“The theory behind that is the interest of the mortgage precedes the tenancy, so that when you rent the place, you rent it subject to the interest in the mortgage,” Prettyman said. “So if the mortgage isn’t paid and you have a foreclosure, you have no rights.”
Depending on the type of eviction procedure the new property owner followed, a tenant had from 24 hours to afew days’ notice to vacate the property, Prettyman said.
The Protecting Tenants at Foreclosure Act is set to expire at the end of 2014, Couch said, but because many believe the foreclosure crisis will continue beyond 2014, U.S. Rep. Keith Ellison, DMinn., on Dec. 8 introduced House Resolution 3619, which would make the law permanent.
Ellison’s legislation also would allow renters to prevail in a civil action against the property owner if the renter’s rights were violated.
Under the federal tenants protection law, a renter can stay a minimum of 90 days or until the lease runs out, Couch said. However, if the new owner plans on living in the home, she said, the renter has to move in 90 days, regardless of the terms of the lease.
“In Arkansas, where tenants had no protections before, it’s a real high learning curve to go from zero protections to ‘You know what, you actually might get to stay a year,’ if that’s what your lease says,” Couch said.
LEASE IMPORTANT
In addition to having a lease agreement, renters allowed to stay in a home under the federal law must also be paying rent that is close to the market rate, Couch said. The 90-day guarantee isn’t extended to someone who is simply living in a residencewhile it’s going through foreclosure.
“They can’t just be staying there; they have to be bona fide tenants,” she said. “The law protects renters that are unaware that their housing situation is precarious and they’re caught off guard by a pending eviction.”
Stover said he regularlypaid $750 a month in rent to landlord Preston Cox and occasionally did odd jobs for Cox in exchange for part of his monthly rent.
In February2010, Stover said he was notified that his lease was being transferred to First Federal Bank of Harrison in accordance with Cox’s bankruptcy. The transfer required Stover to begin paying the bank rent, instead of Cox, and he said he did.
Cox’s bankruptcy attorney, Joanne M. McCracken, didn’t know the specifics of Stover’s case but said Cox’s involvement would have ended when the bank executed its option to assume the lease.
“Legally the bank has a right to collect rent,” said Mc-Cracken, of Garfield-based Meister & McCracken.
Cox’s small-scale property management business was greatly impacted by the economy, McCracken said. His bankruptcy was due inlarge part to vacancies and tenants who were not paying rent.
“A general observation is, if tenants don’t pay their rent, the landlord can’t pay the mortgage, and the loan goes into default,” she said.
Stover said he came home Nov. 21 to find, taped to his door, a writ of possession giving him 24 hours to vacate the premises. He said he immediately contacted First Federal Bank of Harrison and made a verbal agreement with bank attorney Chuck Trantham to have a few weeks to move out.
When Stover learned his new residence wouldn’t be available by the deadline, he called Trantham to ask for more time, he said. However, Stover said he didn’t hear back from Trantham until after he was evicted.
Stover said he was unaware of the federal tenants protection law, and he did not sign a lease agreement with the bank when it took possession of the property.
Stover said he didn’t know of the foreclosure’s implications for him, other than that Cox was no longer paying the mortgage.
“I didn’t know they wouldn’t continue to rent to me,” Stover said.
Trantham declined to discuss Stover’s situation but said he is “very familiar” with the Protecting Tenants at Foreclosure Act and that the eviction was carried out according to the law.
KNOWING THE LAW
It’s not surprising that Stover didn’t know about the federal law that gives renters more time to move out during a foreclosure. There are even attorneys who haven’t heard of it, Prettyman said.
“I’ve actually had to raise it with a couple of our judges,” Prettyman said.
Stover’s situation illustrates why a renter should seek legal counsel if faced with eviction due to a property owner’s foreclosure, Prettyman said. He said he’shad eviction proceedings dismissed by exercising tenants’ rights under the Protection of Tenants at Foreclosure Act.
“The best thing is to call an attorney and quickly,” Prettyman said. “I’ve had those cases and had to whip together some papers and run up to a judge and have them sign it.”
Stover said he had to leave some of his belongings in the house when he was evicted and doubts he’ll get them back. He said bank officials hired three people with Mayflower Transit to put the items in storage.
He said he also didn’t receive the $1,000 deposit that he paid to Cox when he rented the property.
Prettyman said some banks have instituted “cash for keys,” programs, where they give occupants of foreclosed homes money to help find new housing in exchange for leaving the premises clean and intact.
To contact this reporter: [email protected]
Northwest Arkansas, Pages 13 on 01/22/2012