Question: If I am foreclosed, will I owe the bank any money from my mortgage loan?
Answer: After a foreclosure, the bank is entitled to collect any deficiency judgment owed following the foreclosure sale. The deficiency judgment is the difference between the amount you owe on the loan and the amount of money the home is sold for at the foreclosure sale. For example, if you owe $400,000 on the mortgage loan and the home sells for $300,000, the deficiency judgment would be $100,000. This is the amount that the lender could attempt to collect against you personally in a lawsuit.
A homeowner’s personal liability on the mortgage loan can be eliminated through a bankruptcy. If you filed for bankruptcy and received a discharge on your mortgage loan, the lender cannot collect this debt against you (it can, however, still foreclose the home).
The deadline for a bank to file a deficiency judgment case on a mortgage loan is two years after the foreclosure sale (“Statute of Limitations”). If the bank does not file in these two years, they lose their right to collect this debt.
Banks rarely attempt to collect deficiency judgments; most of the time, the homeowner will not have any assets that make such a lawsuit worthwhile. Nonetheless, a homeowner should always ask the bank to waive the deficiency judgment against them in any settlement for a foreclosure matter.
There are several tax consequences relating to deficiency judgments. Homeowners should always consult a tax expert before making any decisions related to these matters.
Massachusetts eviction law allows a tenant to ask the court to delay their move-out from the property. This is commonly referred to as a “stay of execution.” An execution is the formal court document that permits a landlord to obtain possession of the premises through the sheriff or constable. Eviction law allows a tenant to request that the court delay issuing this document and, consequently, postpone the eviction.
As written, the law really only applies to “no-fault evictions”, where the tenant is being forced to leave without cause (as opposed to an eviction based on non-payment of rent or violation of the lease). However, under the right circumstances, the court may be inclined to stay an execution for tenants in other circumstances, if they can show good cause. The law allows the court to stay the execution for up to six months (twelve months for a party over sixty years of age).
A stay of execution can be difficult to obtain and is left entirely to the discretion of the judge. The judge will likely want to see good reasons for granting a stay, and proof that the tenant is making a real effort to find new housing. Tenants have a better chance of getting a stay of execution if they are willing to pay rent for the time they wish to remain in the premises.
Landlords need to remember that tenants have this option of seeking a stay of execution in an eviction case, and should require the tenant to waive this right as part of any settlement agreement in one of these cases.
I’m willing to bet that among the frequently asked questions on landlord/tenant law, the following is at the top of the list: “If my tenant is not paying his or her rent, can I change the locks of the apartment? Can I turn off the utilities?” The answer, in one word: No!
These actions of trying to evict a tenant without going to court, often called “self-help,” are against the law. Not only will this result in civil liabilities, which could include huge monetary damages, a landlord can end up in jail for doing any form of “self help.” Simply put, a formal eviction is the sole means of dealing with a tenant that a landlord wants to get rid of. This doesn’t mean that a landlord cannot try to settle a case with a tenant outside of court, but any interference with a tenant’s living situation is a huge problem.
No doubt, landlord/tenant cases can be frustrating, but landlords are much better off speaking with an experienced attorney instead of trying to take matters into their own hands. The risks just aren’t worth it.
Mediation is an excellent option for anyone involved in a landlord/tenant dispute. This form of alternative dispute resolution can help parties in these cases save enormous time and money.
Mediation is an opportunity for the parties in a case to meet with a trained facilitator for the purpose of working out a resolution to the problem. More and more, trial courts have staff mediators available to assist the parties, with some courts (such as Northern Housing Court) requiring parties to meet with a mediator before seeing the judge. In a mediation, parties are encouraged to freely discuss their case and attempt to come up with a mutually agreeable resolution.
Mediation is a great option in landlord/tenant matters because trial courts are overflowing with cases, especially on summary process day. It is not unusual for a judge to have a caseload of up to fifty landlord/tenant cases in a single session (Boston Housing Court reportedly has 150 new cases filed each week!). Through mediation, many of these disputes can be resolved without the need for a lengthy hearing or trial.
Best of all, mediation is confidential and risk free; parties can still go before the judge if they cannot workout the problem. With this in mind, mediation should be the first step in trying to resolve a landlord/tenant dispute.
Evictions in Massachusetts are known as “summary process.” The goal of summary process is found in Rule 1 of the Uniform Rules of Summary Process: “the just, speedy, and inexpensive determination of every summary process action.” In other words, summary process cases are intended to move at a much faster pace than a typical civil action. While it can often take years for a civil lawsuit to go to trial, summary process cases are intended to be tried only weeks after the filing date.
To begin a summary process case, the landlord must serve the tenant(s) with a notice to quit, which explains the reason why the tenant is being evicted (more on this later). This notice of quit must provide a date by which the tenancy is terminated. After this date, if the tenant has not left the premises, the landlord can begin the case.
The start of a summary process case is opposite that of a typical civil lawsuit. In a typical lawsuit, the plaintiff first files the lawsuit and then serves it on the defendants. In summary process, the plaintiff/landlord begins the case by serving the defendant/tenant with a summary process summons, which must be obtained from the court. On this summons, the plaintiff/landlord selects the date that he will file the lawsuit; called the entry date. After the summons is served on the defendant/tenant, the landlord can file the lawsuit, which must be done at least seven days (but no more than thirty) from the date the summons was served (click here for a useful timeline of a summary process case). From there, the case begins.
Confused? You aren’t the only one; summary process can be a complicated. Given the stress and heartache these cases can cause, I recommend seeking legal assistance if you are involved in one of these cases. Contact me for a consultation.
The New York Times reports that evictions are on the rise across the United States, including Massachusetts, where eviction filings increased 11% between 2010 to 2013. The rise in these cases poses challenges not only to the parties in these cases, but also to the courts, who have to deal with increased caseloads, filings, and hearings.
The article cites several studies showing that the use of an attorney can make a real difference in these cases, a point I can attest to based on personal experience. In Massachusetts, the eviction process is not always “user friendly” and I encourage anyone involved in one of these cases to seek legal representation.
In landlord/tenant cases, “cash-for-keys” often comes up as a popular means of settling an eviction case. In a cash-for-keys settlement, the landlord agrees to pay the tenant(s) a sum of money to leave the premises by a required deadline. The payment of this money is often conditional upon the Tenant(s) leaving the premises in a clean condition and waiving any claims they might have against the landlord.
Landlords, understandably, are often reluctant to even consider a cash-for-keys settlement. Often, the tenant(s) owe the Landlord months worth of back rent, and the thought of the landlord paying the Tenant to leave seems absurd.
While I sympathize with these concerns, I strongly urge all of my Landlord clients to give a cash-for-keys settlement strong consideration when trying to eviction a Tenant. The reason for this is simple economics: a cash-for-keys offer can save a Landlord thousands of dollars in eviction costs (and time).
Landlords who pursue cash-for-keys settlements should make the payment conditional upon the tenants leaving the premises by a required deadline, and leaving the premises in “broom swept” condition. Landlords should ask the Tenants to waive any and all claims they may have against the Landlord, and agree that the landlord be allowed to discard any of the tenant’s possessions left behind after the vacate date. Landlords should also insist that Tenants waive any rights to appeal or stays of the execution (a court order that a tenant can seek for additional time in the premises following an eviction).
Tenants, in turn, should ask the Landlord to waive any claims that the Landlord may have against them, specifically owed rent. After moving out of the premises, Tenants should also take pictures of the property to prove that it has been cleaned out and, if possible, ask a friend or family member to be present so that a witness is available in case the Tenant’s move-out is ever disputed.
In need of assistance with this type of matter? Contact me for a consultation.