The common stereotype of someone being evicted or foreclosed on is a deadbeat loser. And there are plenty of shady renters and homeowners out there. But if the housing bust taught us one thing, it’s that plenty of normal, non-deadbeat Americans found themselves facing eviction or foreclosure after they’d lost their jobs, seen the value of their homes plummet, or didn’t read the fine print on a lease or mortgage.
In such a situation, renters and homeowners have two options: fight or flight. Battle the landlord or bank or quietly pack your bags and disappear into the night. There is a third option as well: stall for time. Dragging your feet is a perfectly legal way to stay put—and in some cases, live for free until you figure out your next move.
In the case of a renter, an eviction can only happen if the tenant is in default of the lease, the most common example being either not paying the rent or consistently paying it late. In such a situation, the landlord issues a “pay or quit” notice, which in the state of Virginia gives the tenant five days to either pay the rent or vacate the premises. If the tenant fails to pay up within five days, a court date is set. It’s here when most tenants make a mistake—they fail to show up in court, thinking they are buying themselves time. In fact, this only speeds up the eviction process.
“If the tenant does not show up and prove he paid the rent, he’s out of there within three days,” says real estate attorney Bill Tucker. The best thing a tenant can do, Tucker says, is make the court date and dispute the case. “A smart tenant will demand strict proof that he’s in violation of the lease,” says Tucker. This is not always easy for a landlord to do, particularly one who is relatively new and inexperienced. The lease itself might be vague on details. And if the landlord (plaintiff) cannot prove the tenant (defendant) is in violation, the judge may rule in favor of the tenant, case closed. If the judge rules in favor of the landlord, the tenant is still granted a 10-day appeal period during which he can further bolster his case or scramble for funds.
In the case of a foreclosure, Tucker “absolutely advises distressed homeowners to delay the process for a reasonable amount of time.” He refers specifically to an arrangement known as “cash for keys.” In an attempt to persuade distressed homeowners to vacate the home without stripping it down to the floorboards—an all too common practice during a foreclosure—banks offer homeowners cash to get out in a timely fashion.
Tucker advises not moving out until such an offer is made.
“I had a client who was being foreclosed upon,” he says. “I advised him to not move out until the bank became aggressive, which they never did. After eight months of such stalling, the bank eventually became so frustrated they offered him $3,000 to move out within 30 days. He accepted the offer and moved out but got to live for free for those eight months and it was all perfectly legal.”
Another perfectly legal stall tactic is to demand the bank produce the note proving they are the legal owner of the mortgage. During the boom years, it was common practice to transfer notes from one pool of mortgages to another, making for confusing if not outright slippery paperwork —particularly in light of the “robosigning” scandal, in which foreclosure-mill employees signed thousands of loan documents without reading them. “Even if the bank does own the note, it can take weeks to produce,” says Tucker.
Stalling for time might come across as unseemly to some, but given that so many “normal” Americans got caught short in the housing bust of the last few years, distressed renters and homeowners are wise to exploit every legal loophole they can.