Law Blog

Like most Americans, I’m not rich.  And neither are my parents, nor were my grandparents, or my great grandparents.  In fact, I’m pretty sure I might be the descendent of thieves and gangsters.  At least that’s what I tell people because it sounds a lot cooler than saying I come from a line of farmers.

Anyway, like a lot of people in my economic bracket, no one in my family has ever experienced the joy of property ownership.  We were born renters and will likely die renters –  hopefully not me though (this law stuff better pay off).  And also like most people not coming from inherited wealth, previous generations of my family didn’t have the best education in the world, if any, as I’m sure most countries with a dictatorship government probably don’t want their citizens developing a mind of their own.

What happens when you put all of this together?  You get a long line of people with only, at best, a tenuous understanding of their rights.  Not to mention an innate distrust of authority or that authority’s ability to protect them.

It’s no surprise then why so many people in this country have no idea what their rights are as tenants.  Though it’s likely that a lot of people have a natural sense of what is right and what is wrong, for some reason when it comes to an injustice being perpetrated against them as a renter, these people are more inclined to let those things slide for fear of rocking the boat and suffering some incredibly painful consequence from their almighty landlord.

Get hit by a car and chances are you’ll likely want the driver who hit you brought before justice and sued in civil court.  But if the heat in your apartment is broken or your plumbing is backed up and your shower lacks water pressure, then for some reason you can live with it.  Aside from the obvious disparity between getting dinged by a car versus having to take cold showers (I’ll try to make more equal comparisons in the future), the distinction doesn’t make much sense, huh?

Now the terms in least agreements vary from property to property, so you might not always have a legitimate dispute (though that’s not to say it’s not possible to sue for almost anything these days).  In general, all states in the country generally have some law or statute in place ensuring that tenants are allowed the right to reside in a property free from health and safety hazards, as well as being of livable standards.  Note that the latter condition is very broad and open to much interpretation.  Depending on the state, it can sometimes favor the tenant or the landlord.

Recent case statistics from LegalMatch indicate that citizens from poorer states, such as Maryland, file, on average, over 70 percent less claims alleging tenant rights violations than people from wealthier states, such as California.  From an optimist’s point of view one might think that there are less renter rights violations in those states.  However, from a more realistic perspective, such violations are probably just as prevalent everywhere you go in the country.

So the lesson here is that you shouldn’t be afraid to rock the boat.  You have rights as a renter and should exercise them.  And if you really need it, sit down with a good tenant’s rights attorney.

It’s been said before, but it bears repeating ad infinitum: if you wouldn’t say it in real life, don’t say it on the Internet.

The popular assumption among the general public seems to be that some special body of law applies on the internet that doesn’t apply in real life. This assumption, as some people have learned the hard way, is incorrect. While there has been much debate over the particulars of how certain areas of the law should apply online, there’s never been any serious debate as to whether it applies.

Enter Amanda Bonnen. She is being sued by Horizon Group Management on a theory of libel for a “tweet” in which she made an offhand complaint about mold in her apartment. According to the complaint, the statement about mold in the apartment is, of course, completely false, and caused irreparable damage to Horizon’s reputation.

This may or may not be true, and that’s not what makes this case interesting. What does make it interesting is how this statement was made, followed by the lawsuit, and the public reaction to it.

It is entirely possible that Ms. Bonnen’s statement was false, and that it did, in fact, cause some damage to Horizon’s reputation. In that case, the lawsuit has merit, and Horizon should, as a legal matter, prevail.

But if they were acting to vindicate their reputation, they could not have gone about it in a worse way. A search on Twitter’s website for “Horizon Group” reveals that almost everyone who has heard about this matter is not very sympathetic with their cause. Besides some childish insults flung at the company (my personal favorite describing Horizon employees engaged in unsavory acts with barnyard animals), and some creative spellings of the word “frivolous,” one can see that many people now assume that Horizon has moldy apartments, whether that assumption is true or not.

So, what have we learned from all of this? Well, everyone involved should have learned some valuable lessons. First off, Ms. Bonnen has learned that if you wouldn’t say something in person, you shouldn’t say it online (as it turns out, there are a lot of people on the Internet who might read what you’ve written). Horizon has learned that filing a lawsuit is not automatically the best way to deal with a problem.

Sanctuary. Adobe. Spacious. Luxurious. Vacant??  Times have changed when it comes to the words landlords used to describe the once highly competitive apartment and other rental spaces market.  Apartments with 5, 10, 15+ applicants the second it is advertised has dwindled down do a couple, if that, and landlords are finding themselves desperate to fill vacancies.

If you are a renter, like myself, and able to afford city life then this is the prime-time to enter into a lease in an apartment at a lower rental cost.  I have seen some of my friends move out of their beautiful high-rent apartments in attempts to save money by moving home, getting roommates or moving to a cheaper location.

Perhaps “Renters Paradise” was a little much for my blog title, but the number of vacant apartments out there is almost at unprecedented levels.  Unfortunately, so too are the factors that tether this fact back to reality: unemployment and economic uncertainty.

According to a recent study, U.S. apartment vacancies are nearing a record low.  Currently at 7.5% and projected to increase, the rising figure reflects the difficult economic times.

Not surprising, the struggling real estate and rental industries are accompanied by an increase in legal problems and litigation.  A study conducted by LegalMatch, looking nationwide at the past 12 months saw a rise in legal inquiries across the board in the Real Estate category.  Landlord tenant issues are on the rise as landlords are feeling the pinch and tenants are demanding more concessions and lower rents. I agree with a recent Yahoo News article that attributed much of the rental issues to the employment problems that have befallen the 18-24 year old category.

Obviously, the effects increased vacancies are having will not be isolated.  An interesting prediction regarding falling home prices relationship to the rental market was articulated in a recent Wall Street Journal article.  The author felt that falling home prices could hit landlords in two ways: “they could force landlords to lower rents to keep up, and could spur some renters to purchase homes. Still, the number of renters who move out to purchase homes isn’t expected to surpass levels seen during the housing boom earlier this decade.”

Whether a renter or buyer these are really interesting times to explore your financial options and research the best financial approach to housing for you!  Don’t be afraid to negotiate your rent, demand concessions at your current location, or look into buying.

You’ve always paid your mortgage on time but now you find yourself unemployed.  You’ve tapped out your savings. You haven’t paid your mortgage in 3-months and discovered a Notice of Default in your mail.  Not only are you put on notice of a default, but since this notice is also recorded with your County Recorder’s office, there are others on the lookout, too.

Take the experience of Charleen Trana a 78 year-old widow living in her San Fernando home of 50 years, worth at least $350,000.  (Dreams Foreclosed: The Rampant Theft of American’s Homes Through Equity Stripping Foreclosure “Rescue” Scams) Because her disabled son was having difficulty maintaining jobs, Trana took out a $100,000 mortgage on her home to help him.  However, when Trana’s health began to fail, her costs skyrocketed.  She fell behind in her mortgage payments. Trana received a notice of default, but that wasn’t all that she received.  Some very nice men approached her days later and offered to rescue her home from foreclosure. Desperate, Trana signed her property deed over to these men for a small sum down.  She also signed inch-thick documents with the promise that these rescuers would not only pay off her mortgage but, in exchange for rent, Trana could continue to live in her home.  But, there was a catch; the rescuers failed to pay-off the mortgage, leaving Trana on the hook both for the mortgage and the rent while they held the deed (and equity) to her home! 

Trana’s story is not atypical.  Indeed, the Federal Trade Commission (FTC) just announced a new crackdown in foreclosure equity stripping schemes.  (Federal and State Agencies Crack Down on Mortgage Modification and Foreclosure Rescue Scams)  One of these schemes concerns loan modification scams.  Firms involved in these scams use on-line ads, spam, and direct mail targeted to homeowners in financial distress, promising high success rates at modifying their mortgages and saving their homes.

While LegalMatch does not specifically track foreclosure equity scams, we have had an explosion of customers contact us during the past year either because a foreclosure had been filed against them or because there was a foreclosure judgment. 

RECENT EXPLOSION OF LEGALMATCH CUSTOMERS SEEKING ASSISTANCE WITH FORECLOSURES

If you suspect that you’ve been approached by a rescuer, contact your local District Attorney and report the individual(s) to the FTC.  If you’ve been a victim of a loan modification or a foreclosure equity scam, you may either be able to file criminal charges or bring a lawsuit against the rescuer for damages.  LegalMatch has many experienced real estate attorneys who can assist you in determining the best course of legal action.  Whatever you do, don’t sign your property deed over until you’ve consulted your local agency or licensed attorney to ensure that you aren’t a victim of a foreclosure equity scam!

Federal Trade Commission Home Equity Scams

National Consumer Law Center

U.S. Dept. of Housing and Urban Development Guide to Avoiding Foreclosures

LegalMatch data is continuing to shed light on startling facts about the United States Housing Crisis. In the past year thousands of customers from around the country have come to LegalMatch seeking foreclosure attorneys. I decided to look at how much these clients reported owing on their mortgages. Based on analysis of these responses, between now and March 2008, the median amount owed in a foreclosure action was $200,000.

That’s a lot of money to owe on your house. It might also give us a clue at the depth of the current financial crisis.

“Toxic Assets” have become the new buzzword during this financial crunch, just like “weapons of mass destruction” started rolling off everyone’s tongues in 2003. What are these toxic assets? Most of them are convoluted investment packages that represent a hodge-podge of upside down mortgages from around the country. In other words, big mixed-up sacks of worthless investments that no one wants. The total “value” of these toxic assets is unknown, and probably never will be known. (Part of the whole problem was they were never actually worth what everyone thought they were.)

What can be guessed at, however, is how much money mortgagors were owed in 2008, and how much they are now looking at as potential losses before recouping anything in foreclosure sales. (I.e. the loss these toxic assets might represent on balance sheets). To do so we can use two rather modest assumptions: $200,000 median debt-per-household based on LegalMatch data, and the (low-end) estimated total number of foreclosures in the US in 2008, which was 2 million according to CNN. Putting these numbers together, we get a staggering $400 billion in total outstanding debt in the U.S. housing market. That’s quite a lot of money, and that is probably an estimate on the low end.

However, haven’t we spent something like $10 trillion in bailout money so far? Or at least promised that much? Even if my estimate is off by a magnitude of 5, we’ve still spent more than that already. What if we had spent a few trillion simply paying off overdue mortgages? A “trickle-up” economy, as opposed to the old “$@*# rolls down-hill” approach. Almost every day we are bombarded with news about bailout this, bailout that, trillion dollars here, hundreds of billions of dollars there. I haven’t seen any of this money, have you? (Well maybe if you work for AIG).

Now before someone says that is just rewarding people for their own shoddy financial planning, what are we doing for the banks and firms such as AIG? Banks and their enabling financial partners created an artificial market where risky mortgages not worth the paper they were printed on were sold off as if they were written in gold-ink. How is it somehow more appropriate to reward them for their misdeeds and not the taxpayers who are footing the bill anyway? These are the institutions that invested your 401K in your neighbor’s upside-down $1 million McMansion mortgage. If your neighbor stays in his home for the same inflated price he mortgaged it for, at least your home price won’t plummet due to a cramdown or foreclosure sale.

I’m not a financial expert, but I like to play one online. Where am I going wrong with my populist approach?