Cook County Sheriff Stops Evictions

The Angry Mick

Thu Oct 09 07:45:40 -0700 2008

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My wife and I work for a legal services firm in Atlanta, her core area of expertise is handling housing cases such as evictions and landlord/tenant disputes, and in the past couple of years she's seen a steady increase in these types of cases. 

One particularly bad one involved the tenants of an entire complex of about 100 units coming home to find that they had all been evicted.  There was no advance warning from the landlord, who turned out to be in another state, and the management team was just as much in the dark as the tenants (and a bit disturbed that they had just been introduced to the joys of unemployment).  My wife and a team of other attorneys managed to get a temporary suspension of the eviction orders while the mess was being sorted out, but, ultimately, everyone ended up having to relocate.

Cook County Sheriff Stops Evictions

President4242

Thu Oct 09 08:55:48 -0700 2008

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Unless the building is being torn down for another use, that result seems to be a bit stupid.  But I guess this is just another one of Thomas Lord's "nonintuitive hyperrational decisions", to forgo rent from paying customers just because the debtor who used to be in between the bank and the renters went bankrupt.

Cook County Sheriff Stops Evictions

Thomas Lord

Thu Oct 09 09:29:00 -0700 2008

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I've a relative near Atlanta whose apartment was recently subject to foreclosure. In that instance, I'm told, a settlement offer was reached -- a "money for keys" deal rather than an eviction. The severe legal friction involved in attempting to prosecute an eviction was presumably a source of leverage towards reaching that settlement.

Something very similar happened to me, here in Berkeley.

Yes, there is a whiff of hyper-rationality to it. In the case of my settlement, we moved to a nicer and less expensive area using settlement money. Meanwhile, while I don't give a rats ass about any pain inflicted on my former landlord, his innocent children wind up in a more secure position and are spared having to watch mommy and daddy spend a lot of time, emotion, and money rendering the nice tenants homeless.

"The debtor who used to be in between the bank and the renters" was also a risk carrier. For example, in just about every jurisdiction everywhere, that debtor -- the landlord -- is on the hook for the habitability of the unit. That is a substantial part of the business function of a landlord. If that business fails then what will you have happen? Who should assume that risk? How much does it cost to assume that risk? Would the money spent by the bank assuming that risk be better spent in other ways?

To be sure I'm strongly in favor of strong renter protections both rent level protections and eviction protections. Most jurisdictions around the country have far weaker protections than Berkeley.

Nevertheless, it is indeed rational to have the option to remove units from the rental market when they are not a going concern. Just so long as tenants are duly compensated.

-t

radical and maybe rad idea

zogger

Thu Oct 09 11:39:12 -0700 2008

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We could always outlaw renting and force the issue of everyone being an owner. Only allow say a one month maximum for like hotels and motels, etc. Any permanent residence must be owned, and it wouldn't matter apartment/town house/ stand alone house. The industry would adapt, it would still be cash exchanging hands for a building/rooms of some sort, just help alleviate all the complexity of it and alleviate any notion that one would always be a renter and never an owner, and help to maybe thin out that whole land"lord" situation. There's something about owning that gives people a little more hope and pride in ownership and willingness to do maintenance and so on. It would also help to bring back some sort of employment security as well, businesses and so on would tend to try and stay more stable, knowing it is more of a pain for people to relocate quickly. You want good local workers, make sure the good jobs stay put. Every business around would be more in favor of that, as it would reduce local churn and force more of a sense of community and neighborhoods, etc.

radical and maybe rad idea

Thomas Lord

Thu Oct 09 12:57:07 -0700 2008

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The "whole land'lord' situation" doesn't seem all that bad to me on balance. It's a very good deal in a lot of situations. A renter's liabilities are diminished. Maintenance is mostly covered. A tenant's mobility is greater. So on.

With decent protections, renting does in fact give rise to "pride of ownership": just ask the owner of the lease on any rent-controlled apartment in Manhattan (or Berkeley, for that matter). It's just a question of how the rights and responsibilities of ownership get partitioned.

I don't know about you but I don't want business limited to finding local workers and I don't want to try and arrange things so that "good jobs stay put". Those both lead to stagnation. Efficiency is better.

While your radical proposal would, I would guess, "reduce local churn" if you think that would "force more of a sense of community" I mainly think you've been out in the woods too long. First, "forcing" a sense of community is kind of an oxymoronic concept. Second, with reduction in "churn" people have a harder time self-selecting neighborhoods they like and, once settled, they're likely to be more aggressive with neighbors as the stakes are higher. Many of the least community-minded people in these parts are to be found among the homeowners who spend a great deal of time, effort, and taxpayer money flinging legal feces at one another, often for years at a time in escalating tit-for-tat scenarios.

Don't get me wrong. I like the idea of ownership. I especially like the idea of, in dense environments, having a lot of owners rather than just a few. And I like more options for tenants and landlords alike even if I don't buy your prescription for radical limitations on both. So, if we're being radical:

Municipalities should be less shy about taking, by eminent domain, the property of negligent landlords and when doing so should seek the formation of cooperatives among existing tenants to act as the new landlords. (Bay View / Hunter's Point I'm looking at you!)

Perhaps it should be standard practice, though perhaps not mandatory, for rental terms to include irrevocable, fair value purchase options.

Subletting should be a nearly inalienable right: you can't even sign away your right to sublet if you wanted to. (This is nearly the case in CA and Berkeley.)

Rent increases on standing tenants and on units vacated non-voluntarily should be controlled. (This is somewhat the case in Berkeley.)

Regardless of the term of a lease if it expires without a new contract being in place it should be considered to continue on a month to month basis in perpetuity subject only to permissible annual increases in rent. Evictions should be only "for cause" relative to those terms and to the inalienable rights of tenants. (This is mostly the case in Berkeley.)

Condominium conversion should have no impact on a standing tenant's rights and determination of whether a unit is a bona fide condominium should be made on the basis of the business use to which it is put rather than on what certificates of permission have been issued. That is to say: acceptance of a tenant should in and of itself limit the owner's rights to dispose of that property freely until such time as the tenant voluntarily relinquishes the unit and the operation of a nominal condominium as a de facto apartment means it is an apartment. (CA and Berkeley law approximate these conditions, too.)

With measures such as those you (empirically, come look) achieve many of the benefits of wide-spread ownership that you are after but without the downsides of mis-allocated liabilities, decreased mobility, etc. My current street is almost but note entirely all renters, for example, and there is a quite a strong back-bone of people who have been here for decades and weave a rich social fabric for the rest of us. Ok, ok, I gush a bit -- but it's really quite good.

On a personal level, I suppose anything could eventually go south but as things stand I think my landlord and I have a great deal for both of us. We essentially own the occupation rights to our unit and unless we really screw up the only way to get them away from us is to negotiate a deal. Thus I have incentive to make minor permitted improvements, to help keep the street clean in front, to develop a friendly relationship with our cops and our mailman, to find my place among the neighbors, to help keep an eye on the doings afoot in the hood, to encourage business development here, to spend money locally, to attend community meetings, etc. etc. I'm limited in that my occupation rights can be sublet (with limitations - I retain tenant liabilities) but not transferred -- I can't properly sell them to a third party without my landlord's consent. On the other hand, my occupation rights have value to my landlord and for the most part his only way to reclaim them (other than my just wanting to leave) is to buy them from me: so it is very much like having a fair for the price slice of equity in the place. The rent controls give me every incentive to help keep my landlord's costs down for he does a quite swell job operating the property and forcing him out of business would be a disaster for us both: we have mutual interests in our mutual success. Meanwhile, yeah, he takes (by far) the lion's share of equity growth in the property in exchange for also taking on all the liabilities and costs of maintaining the place right down to the fixtures. The most probable outcome, if our household finances go ok, is that down the road we want to move and then there's an interesting choice: On the one hand, I can retain my liabilities to the landlord and sublet; on the other hand, I can just voluntarily leave (allowing him to raise the rent to whatever he can get for the next tenant); or the landlord and I can strike a deal. If by that time the potential rent on the place has skyrocketed far beyond the controlled levels or looks as though it will then I guess I look hard at subletting or striking a deal with the landlord. Much more likely it'll be a wash: we'll just walk voluntarily, he'll get to bump the rent 10% instead of 3%, and I'll consider that to be his just reward and not worth haggling over.

Ownership itself isn't all that much different from renting. In most places ownership is essentially renting from the municipality and taking on a lot of liabilities. As a renter, my attitude is that we're just splitting up the equity benefits and liabilities between landlord and tenant in a pretty sensible way. As a trivial example, consider fixtures (say, the stove). The landlord owns several properties. He has vendor relationships in place. He has an inventory of capital equipment like stoves. He has some mad "handyman" competence himself. If the stove in this place breaks the odds are good that he can fix or replace it at a huge discount compared to what it would take an individual property owner to do the same. Granting him nearly all equity value and nearly all serious liabilities in the place is what gives rise to those economies of scale, at pretty much no skin off our neck. It's a win-win.

-t

A word from a renter

truthAddict

Thu Oct 09 18:40:09 -0700 2008

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That sounds kind of like when married people tell me I should get married. Just sayin.

Yay California and Berkeley

Thomas Lord

Thu Oct 09 09:13:00 -0700 2008

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Some anecdotal data points...

California has reasonably strong eviction protections. Essentially, foreclosure on a landlord does not in any way diminish a tenant's right to occupy a rental property. What specific rights a tenant has to not be evicted are determined a little bit by CA law and more so, in some places, by the local municipal ordinances.

Here in Berkeley our eviction protections are quite strong. In most circumstances, regardless of what your lease says, so long as you are making rent and not behaving too horribly you have a strong defense against eviction. Indeed, if a landlord so much as looks at you sideways (by which I mean "attempts or threatens to attempt an unlawful eviction") your protections get even stronger because in so doing the landlord has forfeited their right to evict you at all in many cases.

In most cases, in Berkeley, if your landlord is foreclosed upon that means only that you write your rent checks to the bank and the bank is on the hook for maintaining your apartment.

There are exceptions -- limited forms of "owner occupation move-in" and such. Generally, tenants enjoy excellent protection.

This doesn't prevent landlords from trying to evict and often succeeding against tenants unaware of their rights. Indeed, for at least about a year Berkeley's city office the "Rent Stabilization Board" has seen such a large increase in attempted foreclosure related evictions that they've taken to highlighting the issue and streamlining their handling of it. Apparently they are having to quickly educate both landlords and banks as to the parameters of their respective property rights.

I recently emerged from a situation along such lines (i.e., successfully fought an eviction attempt).

-t

Cook County Sheriff Stops Evictions

mrjk

Thu Oct 09 10:27:05 -0700 2008

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I did see a story early 2007 that was a definite pointer to the current issues. A couple whose house was being foreclosed got a judge to stop foreclosure because they said the bank doing it had no ownership interest. They asked for proof of ownership, and NOBODY could come forward. The mortgage had been split up and resold so much there was no real owner. The judge gave them a restraining order, but I never did see how that came out. I don't see how change of ownership or foreclosure would have any effect on notification laws - the new owner would still have to follow them.

Cook County Sheriff Stops Evictions

David Leppik

Thu Oct 09 13:49:04 -0700 2008

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Yeah, that was in the early days of the mortgage-backed securities meltdown. That is to say, the immediate precursor to the present crisis. (More or less... )

The issue is that mortgage backed securities divide the ownership among several parties. (This was discussed on Technocrat earlier.) In the end, Deutsche Bank wasn't able to foreclose. Presumably, if it owned a controlling share of the securities, it could act as the mortgage owner.

Cook County Sheriff Stops Evictions

duhavid

Thu Oct 09 17:22:44 -0700 2008

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"Dart announced his office will quit carrying out evictions stemming from mortgage foreclosures until lenders start providing proof they have taken the necessary steps to identify who is living at an address and that those facing eviction have received proper legal notice"

Shouldnt that have been the base standard from day 1?

Cook County Sheriff Stops Evictions

Thomas Lord

Thu Oct 09 18:11:01 -0700 2008

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It is the standard but what has changed is the commonness of violating that standard resulting in a procedural policy change in the sheriff's office.

In better times foreclosure enforcement procedures don't get abused much so there isn't much need to double and triple check against abuses. In this case, the situation has changed -- the reasonable presumptions of the sheriff's office have adapted to the change.

-t

Cook County Sheriff Stops Evictions

Paul Jackson

Sun Oct 12 08:55:50 -0700 2008

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Seems to me that all the Sheriff had to do is ask the representative of the mortgage holder if all the requirements have been, and if they hadn't prosecute someone for making "A False Official Statement"; threat of a two year prison term should increase the veracity of the statements considerably. The other thing should a tennant be able to argue that since they have been paying rent that should for among other things, be used for paying the Mortgage, that the landlord had been recieving monies under false pretences, and also would an occupied building generating income be of greater value at auction than an empty one, so wouldn't the mortgage holder be failing to mitigate damages to the owner?

But the most obvious thing is we need to get the courts and the legislators to get it throught their fat heads that doing the right and honorable thing needs to start have legal standing when ever possible.