Roseville, Rocklin, Lincoln, Loomis, Granite Bay - Placer County, California - Real Estate Blog - Souza Realty

Strategic Eviction By Tenants & Squatters - What Every Landlord, Investor & Property Manager Should Know

There have been many discussions about strategic defaults and even some regarding strategic short sales, but it's time to introduce a new one to today's terminology: strategic evictions. If you are a landlord, investor or property manager, you may become the target of a strategic eviction by your tenant or squatter.

A strategic eviction is defined as a tenant or squatter's decision to not pay rent in exchange for rent-free living for a certain period of time (until they get evicted by the current landlord or, if the property goes into foreclosure, the investor or the bank.) The type of person who does strategic evictions doesn't care about the consequences of having an eviction record on their credit report (e.g. difficulty in obtaining future housing or employment) because they never plan to rent a professionally managed property (they target inexperienced landlords or squat in vacant homes) or get a job because it will be subject to a wage garnishment.

We've been managing our own properties since 1998 and have been property managers for others since 2001, so we have experienced several "real life" strategic eviction scenarios that we'd like to share with you:

SCENARIO #1:

The current tenant stops paying rent when a Notice of Trustee Sale is posted on the front door. If the landlord isn't paying the mortgage, why should the tenants be obligated to pay the rent? Well, because the rental agreement they signed says so. Unless it specifically states that rent payments are due and payable ONLY if the landlord pays the mortgage, the tenant MUST pay rent to the landlord as long as they remain the owner of the property.

When this reason was used as the tenant's defense in an unlawful detainer action, the landlord won the suit and the tenants were evicted...then we pursued a money judgment against the tenants and followed up with a wage garnishment.

SCENARIO #2:

Potential tenant searches for home rentals "by owner" (on Craigslist, for example) and offers to rent the property for substantially less than market value rent. The landlord isn't paying their mortgage anyway, so he agrees and collects first month's rent and a security deposit. The tenant never makes another rent payment and since the landlord happens to live 100 miles away and isn't a property manager or a licensed real estate agent, he does nothing and this tenant will likely continue to stay in the home rent-free until the new owner (investor or bank) evicts them.

Had I been the property manager in this scenario, I would have given the tenant a 3-Day Notice To Pay Rent Or Quit and followed up with an unlawful detainer action...as well as a money judgment...and a money judgment renewal after 10 years, if it was still unpaid. Instead, this homeowner decided to manage the property himself.

SCENARIO #3:

A 42-year old woman's ex-boyfriend just moved out of a home (an inexperienced homeowner was the landlord, who was was letting it go to foreclosure) and she breaks into the home, moves in with her new boyfriend, 2 daughters and 3 dogs, then creates a fake lease agreement. When the landlord discovers these squatters in his home, he calls the police, but they are unable to do anything when the squatter shows them the lease agreement. After all, it has the landlord's name on it, which was passed on by her ex-boyfriend, the previous tenant.

The property is subsequently sold in foreclosure to an investment company I represent, so I begin an unlawful detainer action against the occupants, who chose strategic eviction instead of moving out before their notice expired. Since the foreclosure sale "wipes out" any existing lease, it doesn't matter if it was a fake lease or not...the occupants are still entitled to receiving proper notice to move out. Since this home was sold at foreclosure in California, the proper notice terms are:

• 30 days if the property is NOT occupied by a bona fide tenant (if any occupant is related to previous owner or rent is substantially less than fair market value) and occupancy has been less than 1 year.
• 60 days if the property is NOT occupied by a bona fide tenant and occupancy has been 1 year or more.
  
• 90 days if the property IS occupied by a bona fide tenant (no occupant is related to previous owner and rent is fair market value)
  
• The existing lease term must be honored IF the new owner intends to occupy the property as their primary residence AND the lease date is recorded BEFORE the foreclosure notice date.

The unfortunate part is that this 42-year old woman's daughters are 18 and 21...and since they are adults, they will both be named in the unlawful detainer action because of their mother's decision to have a strategic eviction. Having an eviction on their record is not a very good way to start out their lives and when I warned the mother about the consequences she may cause for her daughters, her response was, "You'll be sorry!" and "I'm not moving until the sheriff evicts me!"

We'll see what happens next...but my guess is that when they get evicted, they'll go squat on another property. The home they are currently being evicted from is in Roseville, but the mother is a native of Citrus Heights, so beware if you have a vacant property in Roseville, Citrus Heights or any of the surrounding areas...you may be their next victim!