Scottsdale renter fights to stay in foreclosed home

If Scottsdale had a railroad line, Bill Flood said, his rental house would be considered south of the tracks.

As it is, his three-bedroom home southwest of Hayden and McDowell roads is in a neighborhood hit hard by foreclosures over the past few years.

Flood got an eviction notice a few days after a Jan. 6 trustee sale but is fighting to stay in his home of 15 years on East Moreland Street. The home sold for $98,000, said Flood, who attended the trustee sale.


"It was like they stabbed me in the back," he said of the new owner, Patrick Kirker of Perth Development LLC of California.

Flood is among thousands of area renters affected by the housing meltdown. They often are unaware that their landlord is in default on their mortgage until after a foreclosure and a trustee sale.

That's when a new owner knocks on the door or sends a notice to evict them. Flood was aware his rental home had been sold but he believed his lease would protect him.

Rental tenants who are current on their rent have legal protections under the federal Protecting Tenants at Foreclosure Act of 2009.

Flood has a valid lease with former property owner Margret Williams through February 2013, said Robert Nagle, a Phoenix attorney representing Flood.

That gives him the right to stay in the home through the terms of the lease unless the new owner wanted to move into the home. Then Flood would be given 90 days to move out, Nagle said.

Fair-market rent

However, the federal act does not protect a tenant who is a child, parent or spouse of the previous owner. The lease has to be a proper arms-length transaction and the renter must be paying rent that is not substantially below market value.

In this case, the arms-length transaction and fair-market rent is in dispute, said Scottsdale attorney Mark Zinman, representing Perth Development. He declined further comment saying any evidence would be presented in court, unless a settlement can be reached.

Flood and Williams had been domestic partners but now are friends and she looks after Flood's 13 dogs when he is at work as a plumber, Nagle said.

Flood said he paid $500 a month in cash to Williams in rent and did repairs on the 1,200-square-foot home that was built in 1958.

Flood admits that the house is in poor condition with holes in the walls, a leaky roof and only an evaporative cooler that he installed to keep it habitable in the summer.

Forging a settlement

He said he has tried to work with the new owner to move out before the lease expires or pay more rent if they fixed the house up.

"They say the want to gut it, fix it up and rent it out," Flood said. "I think they just want me out."

Flood said he was offered $1,000 to move out within 30 days but it would take him at least 60 days to move all the belongings he has collected after 15 years in the home.

Nagle said there is a middle-ground solution that would be more cost-effective for both parties short of litigation.

Meanwhile, tenant leases are among the complicating risks for investors buying foreclosed property, he said.

"That's why people prefer to buy retail or short-sale homes," Nagle added.

by Peter Corbett - Jan. 27, 2012 08:36 AM The Republic | azcentral.com



Scottsdale renter fights to stay in foreclosed home