Evidence Needed to Establish Existence of a Bona-fide Tenancy Under PTFA

[sandyclaus]

What is the name of your state (only U.S. law)? California

The property consists of a main single-family house with a separate guest house. The owner/LL occupies a room in the main house, and rents out the remaining rooms and guest house to tenants (total of 5 rental units).

Property was recently foreclosed and sold at auction to a new owner (LLC who intends to flip the property), who subsequently filed to evict the only known occupant of the property (the now former owner). The new owner apparently was not aware that there were tenants in the property, and the LL was not cooperative in that they never notified the tenants of the foreclosure, sale, service of a notice to quit. Tenants only learned that an eviction (Unlawful Detainer) had been filed after the fact.

In order to protect their interests as tenants living in a foreclosed property, each tenant filed a Prejudgment Claim of Right to Possession and were added to the UD filing as additional defendants. An answer was filed asserting that the UD was filed prematurely based upon the 90-day notice requirement under the Protecting Tenants at Foreclosure Act of 2009 (PTFA). The new owner and his attorney have decided rather than to withdraw the complaint, to move forward to trial against the newly named tenant defendants.

When the tenants appear at trial, they are aware that they need to have a bona-fide tenancy in order to assert their rights under PTFA. However, there is a question as to what evidence needs to be presented in order to establish that tenancy. The tenants have resided on the property for almost 3 years. They CAN provide current utility records (telephone/DSL service that was established in their names at the rental property, all other utilities were under the LL's name). They CANNOT provide rent receipts or a written rental agreement as they had a verbal rental agreement and paid their rent in cash. They also CANNOT rely upon the LL (who is getting evicted as well) to provide any testimony or documentation to support their tenancy.

Can anyone advise what kinds of questions might be asked to support the tenancy? What other documentation or evidence would be needed in order to establish these tenants as bonafide for the purpose of defending their rights in the trial?

Thanks in advance!

 

[Banned_Princess]

I will venture that whatever they have will have to suffice. If each person has a utility in their name then thats good evidence.

I suspect that each tenant will be given their 90 days by the court. maybe not an additional 90 days, so maybe instead of fighting it, each should put their effort in some new digs.

 

[sandyclaus]

I will venture that whatever they have will have to suffice. If each person has a utility in their name then thats good evidence.

I suspect that each tenant will be given their 90 days by the court. maybe not an additional 90 days, so maybe instead of fighting it, each should put their effort in some new digs.

Actually, each person does not have a utility in their name. There is a mother/son pair that shares the guest house, the phone service is set up under the son's name but not the mother's. That's the main reason why there is a question as to what else she might need in order to establish her bona-fide tenancy. She can produce a driver's license that was issued in 2009 with the property address in question - do you think that would suffice for her? Mail being sent to her at the address? Anything else?

 

[justalayman]

I presume they are attempting to treat the tenants as guests or family. That is the only way I can see the 90 notice can be ignored.

Have the people (tenants) in question been given a 90 day notice?

They CANNOT provide rent receipts or a written rental agreement as they had a verbal rental agreement and paid their rent in cash.

Do any of them have bank accounts where withdrawals would support their claim of regular payments to the LL?

Do any of them have any known relationship, either familial or social, with the LL that might suggest they were something other than tenants?

was their rent relatively close to market value? was any renters obligation subsidized by federal, state, or local assistance?


Sandy, you're pretty good at this stuff. Any idea where there are any opinion letters or such on the PTFA that might clue you into what may have been ruled as acceptable?

 

[sandyclaus]

I presume they are attempting to treat the tenants as guests or family. That is the only way I can see the 90 notice can be ignored.

Have the people (tenants) in question been given a 90 day notice?

Do any of them have bank accounts where withdrawals would support their claim of regular payments to the LL?

Do any of them have any known relationship, either familial or social, with the LL that might suggest they were something other than tenants?

was their rent relatively close to market value? was any renters obligation subsidized by federal, state, or local assistance?


Sandy, you're pretty good at this stuff. Any idea where there are any opinion letters or such on the PTFA that might clue you into what may have been ruled as acceptable?

There is no issue as to a familial or social relationship to the LL, and the rent charged is comparable with local market rents for similar room rentals.

There are no payment records for some time because the tenants have legally withheld their rent, based upon rent-control issues (failure to register the property with the Housing Authority, failure to obtain a CO for the property, making it illegal to collect rent). If the deficiencies had ever been corrected (to date, they still haven't been), the tenants would still be obligated to pay the back rent. The former owner/LL tried, but did not successfully evict the tenants, nor was the rental agreement terminated (the case was dismissed with prejudice).

I'm assuming that protection under PTFA only addresses the legitimacy of the tenancy, and not whether the tenants are current with their rent (since nonpayment is not an issue for the new owner at this point - they are evicting solely on the basis of the new ownership). As such, there really shouldn't be an issue where rental payments would need to be produced, only proof that the tenancy itself exists. At least, that's MY thinking.

What do you think?

 

[justalayman]

Aha!!!

The former owner/LL tried, but did not successfully evict the tenants, nor was the rental agreement terminated (the case was dismissed with prejudice).

why would the LL attempt to evict them if there was no tenancy? Hmm? Maybe some court records to show the activities of the LL to show there was a landlord tenant relationship established.

. As such, there really shouldn't be an issue where rental payments would need to be produced, only proof that the tenancy itself exists.

Agreed. I wasn't thinking of that to show proof of rent being timely but merely that there had been regular payments (or withdrawals) that could coincide with a monthly payment of rent. Nothing in itself but if you are building an aggregate of facts to show proof of a tenancy, maybe just one part that might add something to it.

 

[sandyclaus]

Hey, JAL! I think that I found case law (a Massachusetts case, but a case on point nonetheless) that addresses the issue.

http://www.nhlp.org/files/FNMA v. Vidal.pdf

In the opinion, it reinforces that there are 3 elements that must be proven to establish a bona-fide tenancy:

1. The tenant is not the former mortgagor's spouse, child, or parent (or other family member)
2. The tenancy was the product of an arms-length transaction
3. Under the agreement, the rent that the tenant was OBLIGATED to pay was not substantially less than the fair market value of a comparable rental in the same neighborhood at the time of the foreclosure.

Note that it says what the tenant was OBLIGATED to pay, not what they actually paid.

If necessary, the tenants can probably dig up something that shows their last rent payments, or perhaps they can provide a copy of the Unlawful Detainer that the LL tried to serve on them when they stopped paying their rent that shows an amount (not advocating that, but it does show an alleged rent value). They could also produce a copy of a recent Craigslist ad that the LL had posted with rent amounts for other rooms in the house (they were all around the same amount, from $550 to $725).

 

[justalayman]

If necessary, the tenants can probably dig up something that shows their last rent payments, or perhaps they can provide a copy of the Unlawful Detainer that the LL tried to serve on them when they stopped paying their rent that shows an amount (not advocating that, but it does show an alleged rent value). They could also produce a copy of a recent Craigslist ad that the LL had posted with rent amounts for other rooms in the house (they were all around the same amount, from $550 to $725).

I would get as much of everything as they can. Better to have it in case you need it. Sounds like it should be a reasonable argument that, given all the info available, there was a tenancy.

 

[sandyclaus]

Update

The tenant ended up hiring an attorney for their appearance at trial.

During the pre-trial preparation, both tenant and the attorney discussed the strategy (asserting their right under PTFA for a 90-day notice), and discussed at length what would be needed at trial to prove that a bonafide tenancy existed. The tenant ALSO asked about the rent issue, and was consistently assured and re-assured that the unpaid rent would NOT be an issue, was told it wouldn't be brought up, and if it was, it would be irrelevant so not to worry about it.

At trial, the tenant LOST. The other side brought up the unpaid rent, and made an issue of it. The argument was made that because the LL CHOSE not to pursue rent after the tenant stopped paying, that the tenancy became a "permissive occupancy" instead. The judge ruled that "permissive occupants" weren't considered bonafide tenants and that prevented them from the protection under PTFA.

The problem here is that the young and inexperienced attorney assured and re-assured the tenant that rent WOULD NOT BE AN ISSUE. At the same time, they also failed to prepare any kind of defense for that possibility. There was even case law readily available to support a finding AGAINST the plaintiff under similar circumstances (http://ronaldrichards.com/index.php/tag/deborah-bass), but the attorney didn't even do any research or planning to defend such a position. IMHO, a good attorney, while planning their strategy, will also plan for alternate defenses in the event they come up, whereas this attorney appeared to be so inexperienced (or overconfident, not sure which one) that they did not do their homework.

It has been suggested that the judge misinterpreted the law, and the available case law supports that fact (the same case law available but not even found or researched by the attorney), and that an appeal or a motion for a new trial would be an appropriate next step. However, what kind of recourse would be appropriate against the attorney who didn't do their job here? I'm suggesting that the attorney should offer to handle the appeal/motion on behalf of the client and not charge them for it. After all, the attorney can walk away from this and just move on to the next case ("Call it a learning experience", she says). The tenant ends up potentially homeless because of the attorney's careless mistakes and lack of professionalism and bad choices. Under the circumstances, the tenant was COMPLETELY unprepared for the possibility of losing this case, and of course, is not prepared to move out in a matter of days once the Writ of Possession is posted. They paid for what they feel was an inadequate representation before the court, and are now suffering the consequences of the grave mistakes that the inexperienced attorney made.

What do you guys think?

 

[Searchertwin]

What do you guys think?

Personally? I think you stuck your nose into someone problem, convinced them that it didn't matter on rather had or had not paid rent and they went forward with your advice.
Why do I think that? Quite a few months back you did the same thing to someone else. Doing what you are doing now. Harm was done done and now you are seeking an answer about how inadequate the lawyer was. The issue was different but the scenario is the same.

Beside anyone knows that not paying rent would be an issue no matter what. I can't believe that an attorney let it slide.
I am not saying he took advantage of them, he probably knew he was going to get his money no matter what, because they already lost. Not paying rent and live there, well, that about sums it up. He will answer for that in time.

Can you contact the American Bar of Association? Yes
Can you back it up? No. Why? What can your prove he did wrong?
Can you sue the lawyer on malpractice? No.
Why?
Let�s say he was negligent. Would the outcome been different?
No
Why? Because lack of paying rent was the issue and ruling was on that. You stated, � The argument was made that because the LL CHOSE not to pursue rent after the tenant stopped paying, that the tenancy became a "permissive occupancy" instead.
The outcome would have still been the same.

What did they do wrong?
They should have seek another advice from another attorney. Their mistake.
The communication should have been better. Their mistake
Their own inadequate legal work, own research - different opinion instead of yours. Their mistake

Best advise to your "clients". Save their money on trying to sue the lawyer, use it to find another place, have them do their own research and communicate with lawyer on how he would go about it.

Take Care

 

[DeenaCA]

It's true that nothing in the PTFA requires tenants to be current in rent payments to the "losing" owner. Both of the cases sandy cited support that. Neither of the cases involve tenants renting a room or guest house from an owner-occupant.

I'm just not sure that the PTFA extends to roomers in an owner-occupied foreclosure. The Act doesn't address the issue, and I'm not aware of any case law that does address it (there may be case law, I just haven't heard of any). Such an interpretation would seem to create a loophole for unscrupulous owner-occupants in foreclosure. I'm having trouble picturing an eviction of just the former owner in this situation. Certainly an argument could be made that the Act does apply here, but it's a gray area in my opinion.

the tenants have legally withheld their rent, based upon rent-control issues (failure to register the property with the Housing Authority, failure to obtain a CO for the property, making it illegal to collect rent)

This could be an issue. It sounds like the renters previously argued that the rooms & guest house are non-permitted and can't be legally rented. This could hurt their claim to be in a bona fide tenancy protected under PTFA. But again, the Act itself doesn't address this.

Have the tenants tried the CA tenant foreclosure hotline? The state association might know more: http://www.tenantstogether.org/article.php?id=640

 

[Searchertwin]

It's true that nothing in the PTFA requires tenants to be current in rent payments to the "losing" owner.

But the fact remains they had to pay rent to meet the criteria of PTFA.
Why? A bona fide tenant is a tenant who pays rent which creates a tenancy. Once a tenancy is broken, non-payment of rent, they are no longer a bona fide tenant.

 

[justalayman]

But the fact remains they had to pay rent to meet the criteria of PTFA.
Why? A bona fide tenant is a tenant who pays rent which creates a tenancy. Once a tenancy is broken, non-payment of rent, they are no longer a bona fide tenant.

paid or were required to pay? You know as well as anybody else, just because a tenant is delinquent in their rent doesn't mean they are no longer tenants.

 

[DeenaCA]

But the fact remains they had to pay rent to meet the criteria of PTFA.
Why? A bona fide tenant is a tenant who pays rent which creates a tenancy. Once a tenancy is broken, non-payment of rent, they are no longer a bona fide tenant.

The losing landlord can evict for nonpayment during the foreclosure process, as long as he or she still owns the property. However, the foreclosing lender or other successor in interest cannot evade the PTFA's (minimum) 90-day notice requirement on the basis that the tenants didn't pay the former owner. Two cases supporting this were cited in this thread.

The new owner/bank can also evict for nonpayment, assuming that the tenants have been notified of where/how to make rent payments. But the new owner can't evict for nonpayment to the old owner. The PTFA defines "bona fide tenancy", but as noted, it's questionable whether the tenants in this particular scenario would qualify.

 

[Searchertwin]

The losing landlord can evict for nonpayment during the foreclosure process, as long as he or she still owns the property. However, the foreclosing lender or other successor in interest cannot evade the PTFA's (minimum) 90-day notice requirement on the basis that the tenants didn't pay the former owner. Two cases supporting this were cited in this thread.

The new owner/bank can also evict for nonpayment, assuming that the tenants have been notified of where/how to make rent payments. But the new owner can't evict for nonpayment to the old owner. The PTFA defines "bona fide tenancy", but as noted, it's questionable whether the tenants in this particular scenario would qualify.

Look up PFTA and it clearly states, “Bona Fide Lease or Tenancy
“The lease or tenancy requires the receipt of rent”

You look up tenancy, I don’t have time.

All three cases did not pay rent, which means, "No receipt". Simple.

Your wanting to defend Sandy, (kiss kiss), I am not talking about the whole issue, just that the rent was not paid, there was no tenancy.

You are stretching the truth a little here, “The PTFA defines "bona fide tenancy", but as noted, it's questionable whether the tenants in this particular scenario would qualify.”

Your trying to justify/rationalize your point, rather than sticking to point of tenancy.

Take Care