Foreclosure Evictions in the City of LA

The HCED committee of Los Angeles city council met December 10, to approve the ordinance provided by the City Attorney's office as a result of discussion in the November 2008's meeting (November 21,2008). The plight of renters of foreclosed properties being evicted has concerned the city council. The city council has extended the RSO regulating evictions to cover foreclosed residential rental property of all types.

Details of the Ordinance:
A bank will NOT be able to evict a tenant from a foreclosed rental property in the city of Los Angeles including, single family dwellings, guest rooms, suites, mobile homes, RVs, new construction, condominiums or multifamily. It does not include hospitals, convents and educational institutions.

Once the property has been sold to non-bank entity the tenant can be given a 60 day notice of eviction but will not receive relocation if the unit was not originally under rent control. Residents of rent controlled units receive existing relocation fees.

This ordinance will sunset in one year. Review in 6 months.

Tenancy must be in existence on the date that a property is foreclosed and does not cover a tenancy created after the foreclosure date. This item is at the discretion of the council.

A posting of renters' rights in foreclosure is required to be posted at rental units in the entry or a communal area, if not a fine of $250.00 will result.

A buyer closing escrow on any multifamily building in the city of Los Angeles must notify the city of the transaction, a penalty of $250.00 will result for those that do not comply.

Items added at the meeting by the LAHD 12/10/08

Position of the Association of Realtors:
In an attempt to protect innocent residents from the foreclosure crisis the city has suggested a temporary measure to alleviate the impact on renters in the city.

The Association recognizes the city's motives, but would like to bring the following implications of the ordinance to the notice of the city council:

1) The payment of utilities (multi-family) and maintenance of the units may create a problem and result in blight and/or termination of the services for the tenants.

2) Occupation of a unit, preventing the refurbishment and showing of the unit, may result in a delayed sale. A longer time period on the market and the resulting reduced sales price may exacerbate the housing problems in the area contributing to blight.

3) Lenders may create restrictions on future mortgage products in the city of Los Angeles making renting a home more difficult or expensive for a borrower thus decreasing the rental housing stock in the city or making loans less affordable and decreasing the private property rights of the owner.