Landlord-Tenant: What Do I Do When My Landlord Gets Foreclosed On?

All over the Valley, tenants are being confronted by landlords or their property managers informing the tenants that the house or apartment has been sold, that the tenants have to get out immediately, and that, if they don’t, the sheriffs will usher them out.

“There oughtta be a law . . .”, as they say, putting these people in jail. This sort of bullying is not only cruel in its effect on tenants, who are put into panic by these representations, but it is deceitful because, as these landlords and managers know full well, the foreclosure does not mean the tenant has to move.

One of the first and best things done by President Obama when he got elected was to push through the Landlord-Tenant Relief Act. Because it was rushed through in response to the housing crisis, it is not particularly well-written. But it is clear about some things, including the following:

First, if you have a written lease and you are in integrity with that lease (which usually means that you’ve paid the rent) at the time of the auction/sale, you are permitted to stay in that property until the end of the lease term. The new owner is entitled to your rent, but you don’t have to leave. The only exception is if the new buyer intends to occupy the property. But even in that event, you don’t have to move out upon auction or sale: they must give you written 90-day notice.

Most of the homes which go to foreclosure are not bought by anyone: rather, they go back to the lender. The lender does not qualify as an owner-occupier, so it cannot kick you out. And of the people who do buy at these auctions, virtually all of them are investors, rather than occupiers. So they can’t throw you out either. The fact that they might want to sell to an owner-occupier is irrelevant.

Second, if you do not have a written lease and are month-to-month, you still do not have to move until the new buyer gives you written notice, and you have ninety days from the date of that notice.

Word to the wise. A lot of tenants, when they get notice that the landlord is in default, stop paying their rent. Big mistake! You are protected by the Obama Act only if you are up to date in your rent. The one thing you do need to do if your landlord goes into default is keep a written record of your payments so that you can protect yourself when the new owner takes over

Landlord-Tenant: When Is It OK To Leave Early?

Most tenants move fairly often. There are no real roots holding the tenant where she is, and lots of reasons arise to move on. A bad apartment . . . a new job . . . a new boyfriend . . . you name it. Few tenants who come to see us have been in the premises for even a year before they want or need to leave.

But be careful why and how you leave. Do it for the wrong reason or in the wrong way and you are liable to leave wearing a judgment in the thousands which will haunt you for some time, as well as a black mark on both your credit and the landlord lists (which will make it difficult for you to rent again).

The instances when the Landlord-Tenant Act clearly permits you to leave early are when the condition of your living space falls in violation of building codes relating to health and safety (e.g., mold), or when your living space is not “fit or habitable” (e.g., overrun with scorpions), or when the common areas outside your living space are not “clean and safe”, (e.g., broken glass and gangs), or when basic services (electric, plumbing, heating, A/C, etc.) are not in “good and safe working order”, or when there are not “appropriate receptacles” for trash, or when there is not a “reasonable” supply of running or hot water.

But watch out for two things . . .

First, you cannot leave without giving 5-day, written notice to the landlord of the problem and your intent to leave. You can go only after the landlord fails to remedy the problem in those five days. But if you have done it right and for the right reason, your rental obligation ends on the fifth day, and you are entitled to the return of your security deposit (less acceptable deductions).

Second, notice that the events justifying your leaving are not matters of convenience but rather matters of urgency, like losing your air-conditioning in the summer or being drowned by multiple roof leaks. Every woman should be able to have a working refrigerator, but the lack of one does not make the premises uninhabitable. For this sort of thing, you will have to use the self-help statute, which lets you subtract for this sort of problem after notice and up to a certain amount, but does not allow you to leave.

[This is a short summary, and is not meant to be a substitute for going to see an attorney who represents residential tenants.]

LITIGATION: If I Hire A Lawyer and Bring a Lawsuit, What Will Happen?

Most people have never hired an attorney or gone to court for anything more serious than a traffic ticket. The process of litigation looks as mysterious to most people as fixing a car or coaching a chess team looks to me. Maybe this will help a little.

 

A civil case usually has six main stages: (1) pre-litigation negotiation; (2) the filing of initial pleadings; (3) disclosure and discovery; (4) dispositive motions; (5) trial; and (6) appeal. This process can be stopped if the parties settle which, statistically, happens more often than not.
Pre-litigation Negotiation
Because litigation is burdensome, not only financially but in other ways as well, most lawyers will attempt to negotiate a settlement before filing the lawsuit. In my experience, these attempts succeed well under 50% of the time, generally because both parties are still emotionally upset about what was “done to them”. I will sometimes forego this step in those instances where the other side seems to be a bully or a conman: those parties generally have to be punched with a lawsuit before they will take my client seriously.
Initial Pleadings
The plaintiff (the party which initiates the lawsuit) files a Complaint stating why the court has jurisdiction, alleging the key facts underlying the dispute, and the legal claims those facts give rise to.
The defendant (the other party) must then file an Answer which answers the statements made in plaintiff’s Complaint. The defendant may, at the same time, allege any claims he has against the plaintiff. Because you know the facts, you will have to work with your lawyer during the pleading period.
Disclosure and Discovery
A little over a month after the pleadings are completed, both sides have to file their mandatory disclosure. This is a process pretty much unique to Arizona. Both sides are required to state their legal claims, describe their factual position, state their position with respect to damages, identify their witnesses (lay and expert) and any witness statements, and produce all relevant documents. Again, you will have to work closely with your lawyer with respect to the disclosure.
Then, the parties enter the discovery period during which both sides use various discovery tools – interrogatories, requests for admission, requests for documents, request to inspect, depositions – to gain evidence for their own case and to force the other side to expose its case before trial. This period can be lengthy as the two sides fight over what they have to produce. This period can also get expensive if there are numerous depositions, especially if those depositions involve expert witnesses.
Dispositive Motions
In most cases that have gone this far, one or both sides will file a motion – usually a motion for summary judgment – which basically asks that Court to hold that the evidence so favors the moving party’s case that there is no point in letting the case go to the jury. This might be because the evidence is overwhelmingly one-sided or because some point of law prohibits the other side from winning under the facts that have surfaced during discovery. Many times, these motions end the case (except for appeal), even though most judges are reluctant to take a case away from the jury.
Trial
This is when you get to see the samurai in your lawyer. I have done trials as short as a few hours and as long as two months. By the time you get out of discovery, your lawyer will have a good idea how long trial will go, but it is impossible to tell now with any certainty. The keys to that trial will probably be your lawyer’s preparation (I find I spend 3-5 hours on preparation for every hour in trial) and the relationship you establish with the jury (do they like, trust, and believe you?).
Appeal
If you lose at trial or in summary judgment, your attorney will discuss with you your prospects on appeal. There are many bases for appeal, so we cannot generalize now. Depending on the case and the complexity of the issues, it could take quite a while before you get a ruling on your appeal.

Settlement
Increasingly, courts are ordering mandatory settlement conferences after a certain number of days have passed since the pleading stage. This is not bad: you are not forced to settle, and the settlement judges are often very experienced and qualified. Sometimes, the parties will on their own, especially early in the case, seek out mediation before an experienced lawyer or retired judge at which the mediator will take turns talking to the parties and their lawyers in an effort to settle the case. We have had a lot of good experience with mediation.