Selling apartment buildings, as a rule, is easier when they are vacant, according to representatives of the real estate industry. But that bit of logic has opened a hefty subplot to the foreclosure crisis over the past year or so.
Tenants have found themselves summarily evicted when the buildings they live in are foreclosed upon, even when they pay their rent regularly and abide by their leases. In some cases, banks have even refused to sell buildings to tenants who have offered to buy them for their appraised value, according to tenants' rights activists. But a proposed city ordinance could change all that.
Almost identical to a bill currently making its way through the state legislature, the ordinance would protect responsible tenants by requiring the foreclosing owners of buildings, largely banks, to prove 'just cause' for any eviction carried out, meaning the tenant would have to fail to pay rent or violate the terms of their lease and couldn't be evicted to simply empty the building.
A vote was scheduled on the petition yesterday, but it was withdrawn to examine potential legal issues with the language. Both City Council President Maureen Feeney and Mayor Thomas Menino had concerns about whether the ordinance, as worded, would be pass muster in the courts. Similar but not identical legislation has been challenged in Washington D.C. and New Jersey and been upheld. But at press time, City Councillors Chuck Turner and Mike Ross were confident the home rule petition would eventually pass.
The councillors also planned to submit two more petitions next week. The first would require a court review for all foreclosures, and the second would incur a six-month moratorium on all foreclosures. All three ordinances have their nearly identical counterparts in the legislature, filed by Sen. Dianne Wilkerson.
"This is what you might call a belt and suspenders approach," Ross said. "We hope the state bill passes, but if it doesn't, it gives them another opportunity to consider it in Boston."
The just cause eviction ordinance would not apply to other landlords or those who buy buildings that have previously been foreclosed. Nevertheless organizations such as the Greater Boston Real Estate Board (GBREB) and the Small Property Owners Association (SPOA) have come out against the law.
"This approach will render the foreclosed buildings very difficult to sell, because a new landlord will be reluctant to take a building with the existing tenants who have a statutory right to extend their lease beyond its expiration date," said written testimony from the GBREB, read into the record by Ross. The statement also said that lenders are not prepared to be landlords, although they GBREB did support Councillor Rob Consalvo's recent ordinance, which would require banks to register foreclosed properties and assume the responsibilities of a landlord.
"These properties will sell like this with this legislation because the banks won't be able to sit on the property like they have been," said Steve Meacham, a tenant organizer from City Life, citing the large and growing number of vacant foreclosed homes and three-deckers in the city. "I would argue that it helps the banks, because as many analysts have been saying, the banks need to declare their losses and move on."
"I think it may be that this is just what they do," said Wilkerson, of the real estate industry lobbyists, "lingering around the halls" at the State House. "They fight anything that might impinge on their rights."
At least one buyer can easily be found for 200 Norfolk St., foreclosed in 2007. The Meyers family, which rented two of the three apartments from a relative of theirs before the building was foreclosed, has offered to buy the three-decker for its appraised value.
"We've been trying to buy the property but because the property is not the value the banks want to sell it for, we can't buy it," said Abigail Meyers at the hearing. "It's really bringing down the community to have all these boarded houses with nobody living in them," she added.
The original mortgage was still due $391,000 according to the foreclosure deed, and the Meyers have offered to pay around $240,000 for the building. Instead of accepting the offer, the bank moved to evict the Meyers, threatening to send constables on two different occasions.
Mayor Thomas Menino's office interceded and asked the bank not to evict the Meyers on the most recent occasion, when a constable was due to arrive on April 16. If the ordinance had been in place, it wouldn't have been necessary to do so.
Like Feeney, Dot Joyce said Menino supported the intent of the law, but had questions about its legality.
"Some other places have like New Jersey and [Washington] D.C. have just cause eviction laws, even outside of the foreclosure context," said Nadine Cohen, an attorney for Greater Boston Legal Services who focuses on the issue. "All the studies are showing that it's just going to get worse. This is an opportunity for Boston to keep properties occupied and that's really what keeps neighborhoods stabilized."