New State Property Foreclosure Law Protects Tenants

by Curtis Black, Community Media Workshop
June 30, 2008 – Low-income tenants with Section 8 rental subsidies are increasingly facing eviction from properties going into foreclosure — often with no warning, and with fewer protections than other renters have.

Often they’ve been paying rent throughout the foreclosure process, with no knowledge that their tenancy was threatened, said Andrea Button of the Legal Assistance Foundation .

“In many cases they don’t know anything until a foreclosure notice is posted on the door, or they just get eviction papers,” she said. “In some cases the landlords have just skipped town.”

A new state law gives tenants up to 120 days from the time they receive notice of foreclosure (less if their lease expires earlier) before they have to vacate a foreclosed property. But they have to continue paying rent.

The problem is that Sec. 8 renters’ subsidies are provided through a contract with the building owner. When a bank or mortgage company takes possession, the subsidy ends, and the new owner has a right to demand market rent. “And there’s no way [tenants] can afford that,” Button said.

As foreclosures continue to increase, LAF is seeing more and more Section 8 tenants, most of them renting houses or duplexes, she said.

Button was one of the presenters at a South Side Consumer Rights and Responsibilities Workshop for Renters held recently by Woodlawn East Community and Neighbors and the Chicago Rehab Network .

Woodlawn is seeing “tons and tons of foreclosures,” said Mattie Butler of WECAN. After a wave of condo conversions, there are now foreclosures on condos, including units bought by investors where renters are being forced out.

“They’ve been paying rent all along, without knowing anything about it,” Butler said. “It’s not a pretty picture.”

The neighborhood is also losing rental units as occupant owners of small multi-unit buildings are forced to sell in the face of rising taxes and utilities, she said.

WECAN was recently named a Housing Resource Center by the city, and the group helps older owners stabilize their situation with weatherization and utility assistance, Butler said.

Affordable housing was eaten up by the recent housing boom, and more is being lost during the current market crash, Butler points out. Already experiencing a major affordable housing deficit, Chicago faces the loss of thousands of subsidized units as project-based Section 8 contracts expire. Funding for affordable housing “has been cut by politicians for years and years,” Butler said. “It makes an impossible situation worse.”