By Katie Penny
I’m getting evicted! What is happening?
Eviction takes place when a person who is leasing something (usually a house or residence of some kind) ceases to retain the right to lease that something from the person leasing it to them. In other words, you can get evicted when your lease is broken.
A lease is a contract, just like most contracts, that has a party on either side: a lessee (the one paying for the use of the thing) and a lessor (the one accepting payment for the use of the thing). Unlike a sale, which exchanges ownership of an object, a lease exchanges simply the possession of the object. The lessee pays for the right to possess the object, and the lessor accepts payment in exchange for giving up possession of the object.
To make this easier, I will refer to the lessee as the occupant and the lessor as the landlord, and assume we’re discussing an apartment.
Leases do not necessarily have to be for specific amounts of time. Both the occupant and the landlord have certain obligations under the lease.
For example, the landlord must maintain the apartment in a condition suitable for the purpose for which the apartment was leased (usually, for living in), among other things. The occupant, for example, has a duty to pay rent, to be prudent in his use of the apartment, and to return the apartment in the same condition, except for normal wear and tear.
However, the lease can be terminated for various reasons. The term of the lease may simply have run—if it was merely for a year, then the passage of a year will mark the termination of the lease. If the occupant has failed to pay rent, the lease may be terminated because the occupant has violated the lease contract.
The lease contract may contain any number of reasons for which the lease may be terminated, so if you want to know how you can violate the terms of your lease, simply read it and see what was included when you signed it.
Once the lease has been terminated for any of those reasons, the landlord may deliver written notice to the occupant that he must vacate the premises within 5 days of delivery of the notice. If the landlord cannot locate the occupant, this notice can be attached to the door. At that point, the occupant has 5 days to vacate the premises and “deliver” it back to the landlord (“deliver” just means vacate and let the landlord take control of the apartment).
If the occupant does not vacate the premises within 5 days of the notice of eviction from the landlord, then the landlord can file suit for eviction in court, and serve a “rule to show cause” on the occupant. That means the landlord is demanding that the occupant come to a court hearing and “show cause” why the occupant should not be evicted.
The court hearing can be as soon as 3 days after the landlord serves the Rule to Show Cause on the occupant (which can also, if the occupant cannot be found, be attached to the door of the apartment). At that hearing, the occupant, if he believes he is being wrongfully evicted, should present evidence to the court showing that he did pay his rent, or show any opposition to the reasons that the landlord is attempting to have the occupant evicted. If the occupant either does not show up at the hearing, or the court decides the landlord is right about the eviction reasons, then the landlord will get a “judgment of eviction.”
If the landlord gets a judgment of eviction, the occupant has 24 hours to vacate the apartment. If the occupant still does not vacate within 24 hours after the judgment, then the court can immediately issue a warrant which orders the sheriff to “deliver possession of the premises.”
The sheriff delivering possession means the sheriff will move all of the property out of the apartment, and he can break any locked windows or doors in order to do it. It is possible for the occupant to appeal the court’s Judgment of Eviction, but even appealing the decision will not keep the sheriff from executing the warrant and moving the occupant's possessions out unless bond is posted with the court.
The worst thing of all is that you can waive the right to five days’ notice in the lease itself, and the landlord can simply file the Rule to Show Cause with the court without giving you any notice of eviction beforehand. This all seems really mean of the landlord.
However, remember that all of the things that the landlord is able to do, and all of the rights that the landlord has over you as his tenant, were given to him when you yourself signed the lease and entered into this contract.
I understand that most of us have very little power of negotiation with standard lease contracts, but if you actually read your lease and figure out what will lead to the landlord being able to evict you, it may help you avoid pitfalls and understand how to avoid getting into such an uncomfortable situation in the first place.
Monday, September 21, 2009
Wednesday, September 2, 2009
What in the world is a mortgage?
By Katie Penny
In law school, to illustrate mortgages, my professors always drew a diagram which resembled a kicked-over capital D. The two lines used to draw the D were arrows that represented the two transactions which had taken place, and it seemed simple enough. However, the amount of confusion about what mortgages actually are and the rights that they entail reveals that the simplicity of the diagram is a bit misleading. In light of the number of foreclosures taking place lately, and the fact that almost every homeowner in this country purchased their home with a loan and a mortgage, mortgages seem like an urgently pertinent topic.
The mortgage relationship at its simplest involves a borrower and a lender. The lender is usually a bank, so for simplicity’s sake, I will say “bank,” but anyone could be a lender to whom a mortgage is granted. Also, anyone could be a borrower, but in the most applicable case, it is a homeowner who has used the loan to purchase a residence.
In essence, when a simple mortgage has been granted, it means this: a bank loans a borrower money. To ensure that it will be able to get its money back, the bank gets the borrower to grant it a mortgage on the property the borrower is purchasing. [The bank gives you money; you give them a mortgage. These are the two lines of my D.] The loan debt is represented by a “promissory note,”—an IOU, if you will—and the borrower has a certain amount of time to pay back the debt, sometimes in installments or sometimes all at once. In exchange, the borrower/homeowner grants the bank a mortgage, which means the bank is “secured” for the amount of the loan through a right to the property on which the mortgage was granted—which is usually the very residence the loan was used to purchase.
In most simple homeowner mortgages, the mortgage document (which is separate from the promissory note) allows the bank to seize and sell the piece of property on which the mortgage was granted if the borrower goes into default on the loan. When the property is sold, the bank is entitled to take the outstanding amount of the loan out of the proceeds of the sale. That way, if you stop making payments on your loan, the bank has the right to take the property, sell it, and get the money you still owed.
I will now try to explain it yet again using actual numbers and names. Katie wants to purchase a house with a price of $250,000. She has 150,000 in the bank (ahh, sweet fantasy!!), but she needs someone to lend her the last $100,000. She goes to Moneybags Bank and they agree to lend her the $100,000 and give her 30 years to pay it back (with interest, of course) in monthly installments. To make sure they get their $100,000 back, Moneybags Bank demands a $100,000 mortgage on the house Katie is purchasing with the loan money. Katie signs the promissory note (this is the straight back of the capital D, by the way), and signs the mortgage (this is the potbelly bottom loop of the kicked-over capital D). She buys the house and moves in happily.
Unfortunately, after paying down $20,000 of the $100,000 debt, Katie finds herself unable to make a few loan payments. Because she has “defaulted” on her loan, the mortgage tied to that loan becomes enforceable by the bank. Moneybags Bank presents the promissory note and the mortgage to the court. If the mortgage and note documents have the proper requirements (and believe me, banks do not usually mess up on making sure mortgages have those requirements; they function on being able to enforce mortgages), the court orders the sheriff to “seize” Katie’s house (which usually just means putting a notice of seizure on the door) and the house is sold at a sheriff’s sale (basically, an auction at the courthouse.) The house sells for $120,000, despite its 300,000 value (since, though it increased in value while Katie owned it, property usually sells for much less than it is worth at a public auction). Katie still owed the bank $80,000 of her $100,000 loan, so the bank takes $80,000 of the $120,000 proceeds, and Katie—who, after all, put in $150,000 of the purchase price—gets the remaining $40,000.
When I say “this can get much more complicated,” I’m sure everyone who has watched the news in the past year would agree. You can grant multiple mortgages on your property, each tied to a different loan, and then when one of the loans is defaulted on, that mortgage becomes enforceable, but not necessarily the other ones (which are tied to other loans.) So older mortgages will stay “tied” to the property despite a sale, and some newer mortgages might be dissolved after the sale. Banks might grant mortgages, then sell the right to enforce the mortgages to other financial institutions. Sometimes, mortgages are not tied to specific loans, but rather to many different loans, or a line of credit. Sometimes there are collateral mortgages, but I don’t want to give anyone a headache.
At its most basic, taking out a loan and granting a mortgage means you give someone the right to sell your house out from underneath you if you do not make payments on the loan. If you take out a loan on which you know you will not be able to afford the monthly payments, do not be surprised when the lender exercises his rights and takes your property. It’s nice to get a loan and have cash in your hands, but when you grant a mortgage for that loan, believe me that you are not getting the money free. If you look up “money, strings attached” in the dictionary, you might just see a picture of my mortgage diagram.
In law school, to illustrate mortgages, my professors always drew a diagram which resembled a kicked-over capital D. The two lines used to draw the D were arrows that represented the two transactions which had taken place, and it seemed simple enough. However, the amount of confusion about what mortgages actually are and the rights that they entail reveals that the simplicity of the diagram is a bit misleading. In light of the number of foreclosures taking place lately, and the fact that almost every homeowner in this country purchased their home with a loan and a mortgage, mortgages seem like an urgently pertinent topic.
The mortgage relationship at its simplest involves a borrower and a lender. The lender is usually a bank, so for simplicity’s sake, I will say “bank,” but anyone could be a lender to whom a mortgage is granted. Also, anyone could be a borrower, but in the most applicable case, it is a homeowner who has used the loan to purchase a residence.
In essence, when a simple mortgage has been granted, it means this: a bank loans a borrower money. To ensure that it will be able to get its money back, the bank gets the borrower to grant it a mortgage on the property the borrower is purchasing. [The bank gives you money; you give them a mortgage. These are the two lines of my D.] The loan debt is represented by a “promissory note,”—an IOU, if you will—and the borrower has a certain amount of time to pay back the debt, sometimes in installments or sometimes all at once. In exchange, the borrower/homeowner grants the bank a mortgage, which means the bank is “secured” for the amount of the loan through a right to the property on which the mortgage was granted—which is usually the very residence the loan was used to purchase.
In most simple homeowner mortgages, the mortgage document (which is separate from the promissory note) allows the bank to seize and sell the piece of property on which the mortgage was granted if the borrower goes into default on the loan. When the property is sold, the bank is entitled to take the outstanding amount of the loan out of the proceeds of the sale. That way, if you stop making payments on your loan, the bank has the right to take the property, sell it, and get the money you still owed.
I will now try to explain it yet again using actual numbers and names. Katie wants to purchase a house with a price of $250,000. She has 150,000 in the bank (ahh, sweet fantasy!!), but she needs someone to lend her the last $100,000. She goes to Moneybags Bank and they agree to lend her the $100,000 and give her 30 years to pay it back (with interest, of course) in monthly installments. To make sure they get their $100,000 back, Moneybags Bank demands a $100,000 mortgage on the house Katie is purchasing with the loan money. Katie signs the promissory note (this is the straight back of the capital D, by the way), and signs the mortgage (this is the potbelly bottom loop of the kicked-over capital D). She buys the house and moves in happily.
Unfortunately, after paying down $20,000 of the $100,000 debt, Katie finds herself unable to make a few loan payments. Because she has “defaulted” on her loan, the mortgage tied to that loan becomes enforceable by the bank. Moneybags Bank presents the promissory note and the mortgage to the court. If the mortgage and note documents have the proper requirements (and believe me, banks do not usually mess up on making sure mortgages have those requirements; they function on being able to enforce mortgages), the court orders the sheriff to “seize” Katie’s house (which usually just means putting a notice of seizure on the door) and the house is sold at a sheriff’s sale (basically, an auction at the courthouse.) The house sells for $120,000, despite its 300,000 value (since, though it increased in value while Katie owned it, property usually sells for much less than it is worth at a public auction). Katie still owed the bank $80,000 of her $100,000 loan, so the bank takes $80,000 of the $120,000 proceeds, and Katie—who, after all, put in $150,000 of the purchase price—gets the remaining $40,000.
When I say “this can get much more complicated,” I’m sure everyone who has watched the news in the past year would agree. You can grant multiple mortgages on your property, each tied to a different loan, and then when one of the loans is defaulted on, that mortgage becomes enforceable, but not necessarily the other ones (which are tied to other loans.) So older mortgages will stay “tied” to the property despite a sale, and some newer mortgages might be dissolved after the sale. Banks might grant mortgages, then sell the right to enforce the mortgages to other financial institutions. Sometimes, mortgages are not tied to specific loans, but rather to many different loans, or a line of credit. Sometimes there are collateral mortgages, but I don’t want to give anyone a headache.
At its most basic, taking out a loan and granting a mortgage means you give someone the right to sell your house out from underneath you if you do not make payments on the loan. If you take out a loan on which you know you will not be able to afford the monthly payments, do not be surprised when the lender exercises his rights and takes your property. It’s nice to get a loan and have cash in your hands, but when you grant a mortgage for that loan, believe me that you are not getting the money free. If you look up “money, strings attached” in the dictionary, you might just see a picture of my mortgage diagram.
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