Behind an overgrown laurel hedge, a house perches over Lake Union on
the north slope of Capitol Hill. Andrew (not his real name) moved in
two years ago, splitting the $2,200 monthly rent with three housemates. Although the relationship
between the four tenants and their landlord devolved over time, that
conflict, combined with the foreclosure crisis, produced an unexpected
windfall: free housing.
Rats invaded the wooden bungalow in
December 2007. When their
landlord failed to exterminate the pests as promised, Andrew and the
other tenants stopped paying rent, certain that this would motivate the
landlord to fix the problem. Instead, Andrew says, “He just dropped off
face of the earth.” Two months later, the tenants found a notice from
U.S. Bank taped to their front door. It said the landlord was $15,000
behind on his mortgage payments and that the bank would auction the
house off in April.
April came and went. “No one called us, no one said rent was late,
and no one said that if we don’t pay rent we will be evicted,” Andrew
says. The residents took care of the rodents and continued to pay
utilities in their own names. But they didn’t pay any rent.
Then, in early September, the bank posted another note on the door.
This time, it offered the residents a deal: If they moved out within a
week, they’d get $1,500 to divide among them. Knowing eviction could
take months, the tenants let the week run out. They’re currently in
their tenth month of rent-free living. “Neither the owner nor the bank
has told us we need to leave the premises at all,” Andrew says. “We are
renters turned squatters.”
Marc Stern, a Seattle bankruptcy lawyer, says he has never heard of
a similar case, but adds, “I suspect it is going to become more
common.”
This August, home foreclosures in King County were up 60 percent
over the previous year, according to RealtyTrac, a California-based
foreclosure-tracking firm. Tammy Chan, a company spokeswoman, says
banks repossessed 272 properties in King County via foreclosure that
month; as of August, more than 1,300 repossessed homes were sitting in
inventory, unsold.
“It is very common for renters to be pushed out of their homes
because of foreclosures and landlord negligence,” says Emily Paddison,
a community organizer for the Tenants Union of Washington State, which
advocates for affordable housing and assists renters. She adds that the
number of renters in foreclosed homes “has definitely jumped up a lot
in the last year.”
For banks, allowing tenants to remain in those houses—even
tenants who don’t pay rent—may make sense. “I’ve heard that some
of them are not going to [evict residents] because it creates this
liability,” says bankruptcy lawyer Stern. When a bank owns a vacant
house, its insurance rates go up, because there’s more risk of
vandalism, burglary, and fire. And some utility costs, such as garbage
and electricity, continue even if a house is vacant.
Andrew and his housemates appreciate the free rent, especially
because nobody has asked them to pay. Still, the uncertainty nags them.
“We just live in constant fear that we will… be evicted,” he says.
“But we’ve lived in that state for so long we have become accustomed to
it. We never thought it would go on so long. We thought we would be out
by the end of January—and here it is October.” 
Need a new roommate?
ha ha, that’s awesome. A great opportunity to set some money aside for a rainy day – hope that they’re taking advantage of it.
“A great opportunity to set some money aside for a rainy day – hope that they’re taking advantage of it.”
What this guy said…
Maybe the house wouldn’t be facing foreclosure if they’d paid their rent. What a bunch of jerks taking advantage of someone for absolutely no reason except selfishness.
It sounds like their landlord is not an asshole, but just a really messed up, disorganized, spineless loser.
Even if he was an asshole, relishing in and then taking advantage of someone else’s misfortune it super immature. I can’t wait until they grow up and find themselves in a similar position.
erm, the article states that the landlord was $15,000 behind on his mortgage payments after two months of their nonpayment. So one assumes that he was approximately $10,500 in debt before they stopped paying.
It sounds like the house was going to be foreclosed one way or the other. Plus, as a landlord, he’s got other people’s livelihood in his hands – being disorganized and spineless IS being an asshole; the same way my doctor would be an asshole to hide the fact that I had cancer because he wanted to avoid confrontation.
Congrats on the free rent, but I don’t get it.
US Bank gave notice (in March 2007?) that the house would be auctioned in April. Why didn’t the bank, the new owner, collect rent if they didn’t auction the place?
18 months have passed and it seems the bank could have taken in $39,600 in rent – more than enough to catch up the mortgage, but didn’t.
Is this one of the “troubled assets” that taxpayers will be buying with the Wall Street bailout bill?
having rats infest your house creates an unsafe living condition. that spreads disease and rat shit everywhere is disgusting…and if your landlord doesn’t do anything to take care of that after a tenant complaint, that is justification enough to not pay your rent…why don’t you bone up on your tenant/landlord rights there children and inform yourself before you run your mouth via internet post.
Uhm, no, you can’t just stop paying your rent. According to Washington State Landlord/Tenant Law, you can pay for the extermination yourself and deduct that amount from your rent, but you can’t actually stop paying rent without being in default.
Yes, the bail out will pay for deadbeat banks that didn’t make their tenancy legal and collect rent. So it’s a win/win. Four people avoid homelessness and stiff the bank in the process. The holder of the mortgage will probably go back to being a serial landlord in a year or two. Economy saved.
Where the hell can I sign up for free rent? These people lucked out!
Nothing is free. They may not be paying rent, but someone will pay for it. Probably tax payers.
Our country is in a pickle because Americans want something for nothing. These guys just add to the problem and screw someone else…
isn’t this article blowing their cover?
I am writing in response to Dominic Holden’s article, “Home Free:
Foreclosure Crisis Benefits at Least One Group: Renters” from September 30th, 2008. I work in the housing department of Solid Ground, a HUD-certified housing counseling agency. I am generally grateful for Mr. Holden’s attention to the issues that impact tenants as their perspective is often excluded from the housing crisis.
However I take issue with the general portrayal of the foreclosure crisis being a positive predicament for renters. It is quite the opposite; not a week goes by that I don’t talk to renters across Washington State either evicted or forced out of their housing as a result of foreclosure.
In fact, under current laws there is no requirement to notify tenants that a home is in foreclosure or that the home owner is in default. Once the home is foreclosed on the law even allows the renter’s lease to be dissolved, catching people off guard with only twenty days from the date of the sale to find other housing. For many, especially low-income people or those with disabilities, this will often result in homelessness.
The article focuses on a unique situation and portrays it as a trend. In reality the foreclosure crisis is quite a grim situation for renters caught in the middle of a homeowner’s bad loan.
I have spoken to renters who came home only to be greeted by the sheriff, not even aware they were in danger of being evicted. There are consequences: If the eviction lawsuit is filed it will show up on a renter’s permanent record following them everywhere as a mark that will deny them housing. Reuters recently wrote a story on the effect on renters.
This is the actual trend that exists. The Illinois legislature even passed a law recently to permanently seal eviction records related to foreclosure, recognizing innocent renters should not be permanently marked for the owner’s mistakes. Washington would be wise to pass similar laws.
Renters should also never withhold their rent; that is not a legal right of the tenant. It only gives the property owner the upper-hand to evict the tenant for non-payment. If renters ever have questions concerning their rights, they should call our Tenant Services hotline: 206-694-6767 Monday, Wednesday, Thursday from 10:30am-4:30pm.
Hey, tenants, great tactic.
1. locate overleveraged house to rent
2. attract rats with food mess
3. stop paying rent, save $ for down payment.
4. buy cheap from bank
How long was the term of the lease? If the lease has expired then these guys need to do the right thing and move on. If the lease term has not expired then more power to them.
Banks should rent out their foreclosed homes that are not selling. This would help prevent squatters, theives, drug dealers, and the like from taking over neighborhoods with lots of foreclosed homes. A good tenant who keeps the home in good condition could help it sell for a higher value while at the same time minimize the banks losses while the home is on the market. I think it would be a win-win for the bank.