Renters' Legal Rights and Foreclosures in Denver
In early 2008, "USA Today" reported "foreclosures are ripping through the rows of new homes in the flatlands where Denver turns to prairie." Tenants in Denver who are subject to the effects of foreclosure are not afforded any special protections. Only statewide and federal notice requirements cushion the blows.
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The Foreclosure Process
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Understanding the foreclosure process and related laws is probably the best way for a tenant to prepare for whatever might happen during and after a foreclosure. The foreclosure process is determined by state law. In Colorado, foreclosures are most often nonjudicial, meaning a lawsuit against the borrower does not have to be filed; however, the lender does need court authorization for a foreclosure sale, which it obtains after proving it owns the loan and that the borrower is in default. The lender records a Notice of Election and Demand, and a public trustee schedules a sale date approximately three months later.
Preforeclosure Sale Notice to Tenants
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According to the National Housing Law Project, Colorado state law requires the public trustee to mail a copy of the notice of sale and associated documents to the occupant of the property no more than 20 days after the Notice of Election and Demand is recorded. This notice informs the tenant that the property is in foreclosure and includes the anticipated sale date, which will be approximately three to four months down the line.
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Protecting Tenants at Foreclosure Act
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The federal Protecting Tenants at Foreclosure Act was signed in May of 2009. It requires foreclosing lenders to honor existing leases and provide tenants with advance warning of a post-foreclosure eviction. Before this legislation, most leases were wiped out in a foreclosure. Tenants who have a fixed-term lease that has not expired are afforded the most protection because the lender cannot evict until after the lease expires. Tenants with month-to-month leases or without leases must be given a notice at least 90 days before the new owner -- whether the foreclosing lender or a buyer at the foreclosure sale -- files for an eviction in court.
Cash for Keys
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Because there are no federal, state or local laws in Denver that prevent an eviction after foreclosure, the best a Denver tenant can do is use the advance notice of foreclosure and eviction to plan for a move and to work with the new owner to negotiate for what is called "cash for keys," a program that many lenders offer occupants to voluntarily move. These lenders participate in this program because it saves them the time and cost of a court-ordered eviction. Occupants participate because it provides them money to move. When and if you receive a pre-eviction notice, call the new owner and ask about cash for keys.
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References
- "USA Today"; Mortgage Defaults Force Denver Exodus; Brad Heath and Charisse Jones; April 2008
- National Housing Law Project; State and Local Tenant Protections; November 2010
- Nolo: The Foreclosure Survival Guide
- Federal Reserve Board: Protecting Tenants at Foreclosure
- "The New Yorker" magazine; Cash for Keys; Tad Friend; April 2009
- "The Denver Post"; Many in Denver Still Underwater in Loans; Margaret Jackson; February 2010
- Photo Credit denver image by Craig Stevens from Fotolia.com
