Renters often face dilemma when landlord falls into foreclosure

SAN FRANCISCO -- In early June, a handwritten note, written in a language she couldn't understand, appeared on the front door of Bing Ling Zeng's apartment.

"You will be needing to vacate this property soon," it said.

The following month, Pacific Gas and Electric Co. shut off the power. The food in the refrigerator spoiled, forcing Zeng to go out several times a day to buy groceries and milk for her three young children. Her 62-year-old mother-in-law couldn't recharge her electric wheelchair.

Zeng and the other Chinese family sharing the space hadn't fallen behind in their rent or bills. The only thing they did wrong was to lease an apartment from a landlord who fell into foreclosure, an unforeseeable mistake with which many are grappling across San Francisco.

Tenants' groups around the city report a sharp rise in such cases, as lenders repossess growing numbers of local homes. Renters are being told to leave, are living in the dark or are receiving little response to their complaints as their homes fall into disrepair.

State and local laws prohibit landlords from evicting tenants or shutting off utilities in most circumstances like these, but not all renters are aware of the rules, and not all of the entities that take control of properties try to learn them.

"The basic problem is that the people who are acquiring these properties, they don't understand or want to understand that tenants have rights in San Francisco," said Tommi Avicolli Mecca, director of counseling programs at the Housing Rights Committee of San Francisco. "You can't just go in and tell them to leave, you can't shut off utilities, you can't call the police. You can't do any of that stuff."

He and other tenant advocates and attorneys worry that many renters who aren't aware of these rules are being pressured into handing over their keys.

The issue was virtually unheard of a year ago. The San Francisco Tenants Union had to circulate a memo to its counselors earlier this year because few had ever encountered it before.

The exact number of tenants dealing with the aftermath of a landlord foreclosure is difficult to ascertain. Three tenants groups contacted by the San Francisco Chronicle reported around 130 cases this year, but most counselors believe that many more tenants aren't contacting the organizations. What is known is that lenders foreclosed on 492 homes in San Francisco during the last year and a half, according to DataQuick Information Systems.

Lenders who take back properties or investors who pick up foreclosed homes generally prefer the buildings empty, because that makes them easier to sell. Under San Francisco laws, however, those aren't grounds for an eviction in a rent-controlled building.

Unless tenants have stopped paying rent or otherwise have misbehaved, generally they can be forced out only when a new owner plans to demolish the property, has secured the necessary approvals to convert into it condominiums or plans to move in family members or himself or herself, according to the city's rent ordinance. Even then, the owner typically must provide several months' notice and thousands of dollars in relocation costs.

In addition, new owners -- a bank, a trustee or otherwise -- generally become liable for the same obligations of the previous landlord, said Robert Collins, deputy director of the San Francisco Rent Board. That means that if the original lease said the landlord pays for electricity, as Zeng said was the case for her apartment, the company that bought it is responsible now.

Nevertheless, the Zengs' power stayed off for a week. It was switched back on only after the Housing Rights Committee contacted PG&E and tracked down New Vista Asset Management, which took control of the property, Avicolli Mecca said.

The note left on the door, stating that the families "would be needing to leave soon," was from a real-estate agent representing New Vista.

New Vista of San Diego didn't respond to inquiries from the Chronicle.

PG&E spokesman Joe Molica said the utility has a policy to help customers in this situation. Among other things, it posts notices at homes letting tenants know that they can assume utility payments without becoming liable for the landlord's previous bills, and can deduct that amount from their monthly rent.

Even if the law is largely on the tenants' side in these circumstances, relaying the rights of tenants and responsibilities of landlords is a challenge, said Ken Greenstein, a partner at San Francisco tenant-law firm Greenstein and McDonald.

In an era when mortgages are bundled and sold to investors, just figuring out who owns a property after a foreclosure -- and is responsible for duties described in a lease signed years ago -- can be difficult.

To help bridge the communication gap, the city will soon begin sending letters in multiple languages to tenants in repossessed homes, advising the occupants to contact the Rent Board and housing counseling agencies, Assessor-Recorder Phil Ting said. Similarly, Supervisor Tom Ammiano has asked PG&E to find ways of ensuring occupied apartments aren't unplugged after a foreclosure.

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)