The Governor of Arizona signed into law HB2766, which is designed to protect tenants for Landlords who rents a tenant a foreclosed on house and then walks away with the tenants rent and money leaving the tenant high and dry.
The law provide language that the lease must now contain if the property is foreclosed on, it is as follows or substantial the same: Continue reading
As Real Estate Agents we have a duty to do what is right and obey the law. Here is an article in the Mesa Tribune about a Real Estate Broker, who is probably going to lose her license and if she employee any agents those agents will also be out of work. Read it Here!
Below is a link to a tragic story that could have been avoided had the landlords followed city code and complied with building codes. Instead a family is devastated and the Landlords are facing criminal charges. Don’t let this happen to you.
Read the story here.
Fair Housing laws are established to protect people rights and established classes which are protected. The Federal law is 42 U.S.C. 3601 et. Seq. The protected classes are:
Remember this, that just because somebody is a member of a protected class doesn’t mean that you have to rent to them or that you can’t evict them.
Here are some reasons for not renting to somebody:
The minimum criteria you use to deny residency to anyone should be in writing. Do not stray from this minimum criteria, to do so, you could be setting yourself up for a discrimination claim.
In this last legislative session here in Arizona the anti-deficiency law changed. This is a fairly big change because it has the greatest potential to do harm to real estate investors. This law was pushed by the Arizona Bankers Association. The current law reads as follows:
Arizona Revised Statutes (A.R.S.) § 33-814 currently states that within 90 days after the date of sale of a trust property under a trust deed, a legal action may be brought to recover a deficiency judgment against the borrower (trustor) who has now had their property foreclosed. The deficiency judgment must be for an amount equal to the sum of the total amount owed as of the date of the sale either by the fair market value of the trust property as determined by the court or the sale price at the trustee’s sale, whichever is higher. The current law prohibits a lender from seeking a deficiency judgment against the trustor (foreclosed property owner) if the trust property is 2.5 acres or less and is used as a single one-family or single two-family dwelling.
The law effective September 30, 2009 - SB 1271 amended A.R.S. § 33-814 (G) to require that the trustor must have “utilized” the property for six consecutive months and a certificate of occupancy must have been issued. What does this likely mean? Various attorneys are opining different theories. …. interpretation of the statute is that after September 30, 2009, properties sold at trustee’s sale likely will not qualify for the anti-deficiency exemption unless the trustor lived in the single one-family or single two-family dwelling for at least six consecutive months.
The above information was taken from “The Capital Insider” This publication is put out by the Arizona Association of Realtor.
You may be asking why is this important and why should I be paying attention. As we have seen, investors in the past have been able walk away from a property and for the most part haven’t had to worry about deficiency judgements but that is about to change with this bill. The burden of proof will now shift to the investor to show that they have met the requirements to avoid the judgement.
We’ve been frustrated and I’m sure that you have been and are frustrated over the last few months with the number of vacant units. Some of you are doing better than others with the number of vacant units while others are struggling to keep building occupied.
I’ve been talking with other property managers with whom we have a relationship with about the number of vacant units they have, what their experience is and which units they are having the most trouble renting.
Consensus is, the most difficult units to rent right now are 2 bedroom 1 bath units. Most apartments and multi-family units are made up of 2 bedroom 1 bath units. There in is the problem, two bedroom units are a dime a dozen and the competition for tenants is great.
Large apartment communities are offering unbelievable specials: $1 move-in, $99 move-in, 3 months free rent, no credit checks, no deposits etc. One manager I talked with said “How do we compete with the large complexes that offer these special. The answer is we can’t. The 4-plex owner doesn’t have the capacity to play these games.
The areas hit the hardest by vacancies is are low income areas. These are the people that loose their jobs first when times are tough. These are the undocumented people who can’t get jobs or loose their jobs when it is found out they are in this country illegally.
It was reported last month that 21,000 people in Arizona lost their jobs and filed for unemployment benefits, ouch.
The low income areas are also where you find the highest concentration of 2 bedroom apartment and multifamily housing. This is also where the greatest competition and stealing of tenants by Landlords goes on.
In some of the communities we see close to 50% vacancy and in others areas it is only about 10%. The properties that do the best have a mix of uses around them and this is also the area where the rents are pretty stable.
Because of the competition, another trend we are seeing is that rents are coming down, In some cases by as much as $150, ouch.
The other thing we are seeing is that evictions are on the increase. The average eviction cost you, the client about $300 and that is because of our relationships with attorneys. If it wasn’t for that relationship it would probably cost you double that.
In addition, we are also seeing cities crack down on what they call slum properties, These are properties where the yards are not taken care of. Sometimes it is also for abandoned cars or trucks that are left parked with out current tags.
So what can we do? In these tough economic times the first choice is to cut back and let maintenance slide, to some extent that can be done, but I would caughtion you about letting it go to long. One of the worst things you can do is to let the yard go. This is one of the first impressions the prospective tenant sees of the property. If it looks unclean they will go some place else. An unclean property also attracts the attention of the city, if the city gets involved your cost will go up because they will find other things to ticket you for.
One of the best places you can spend your money is on advertising and I’m not talking about the big papers but the small weekly papers. We have had more success with these than anything else.
Another great source is Craig’s List if those renting your unit will look there. If your properties are low income you may not see any traffic at all.
Another source is Section 8 Housing, although communities no longer have list of housing, they have gone to a third party listing service.
Some of you have asked when do I see this coming to an end? Honestly, I don’t see an end in the near future. Will it get any worse? That is hard to say. I think for the most part things can only get better. In the meantime we keep our heads down and keep plowing.
