The laws on foreclosure get increasingly complex, attorney says.

Orlando attorney Charles Castellon, who specializes in real estate litigation, says new laws are designed to protect tenants renting homes in foreclosure, and home owners associations. (Photo by Michael Freeman.)

KISSIMMEE – With the housing market still struggling to hit bottom, a lot of owners have turned to the rental market, and use property management firms to find tenants and collect the rent.
As long as the home is occupied and the rent checks come in every month, it should be the end of everyone’s problems. Only, in too many cases, it’s not.
A growing challenge for both property managers and tenants alike is what happens when the owner stops paying the mortgage, allows the property to fall into foreclosure …. and doesn’t bother to let anyone know until the sheriff’s office is at the door of the home, informing the renters they have 24 hours to get out?
Charles P. Castellon has seen it happen.
“If the owner leases a property and there are people inside the house, only a 24 hour notice is required by the sheriff,” he said.
Castellon is an Orlando attorney who specializes in real estate litigation and asset protection for businesses and individuals with creditor claims. This morning, he met with the members of the Central Florida Vacation Rental Managers Association, the trade group representing managers of the growing number of homes in this region rented on a short term basis to vacationing families. The meeting was held at the Falcon’s Fire Golf Resort in Kissimmee.
More than a few vacation home property managers have dealt with this problem, said Colin Young, the association’s president.
“It’s an issue that has been around for several years,” Young said. “Some of us are up against it now.”
Vacation homes are a growing business in this region, particularly in Northeast Polk County and in Northwest Osceola County. The homes appeal to families coming to this region to visit the theme parks and other tourist attractions, who want to rent a fully furnished home with multiple bedrooms, a kitchen, and a private pool, rather than a hotel room.
But even this industry hasn’t been immune to the problem of home foreclosures.
Castellon said the laws have gotten more complex in recent years, as Florida has faced a virtual tidal wave of home foreclosures since the housing market collapsed in 2008. Florida lawmakers, he said, have responded to the crisis in several ways.
“There is a statute passed in 2009 to address tenants,” he said. The Protecting Tenants at Foreclosure Act gives tenants the right to 90 days notice, or the remaining balance on the lease, in the event of a foreclosure. That makes it harder for tenants to be forced out onto the street overnight, he said.
“Sometimes people get foreclosed upon without notice,” he said. If the banks foreclosing on the house attempt to force the renters out overnight, that could be a clear violation of their rights, Castellon said.
“When lenders change the locks or change anything without a court order, that in my view constitutes a crime,” he said. “If the banks changed the locks while the tenants were in there, I say that is illegal, because you’re entitled to 90 days notice.”
Another new law, he said, gives homeowners associations the right to collect rent if a condo owner is not paying the monthly HOA dues.
“This applies if the owner is not paying dues, but collecting rent,” Castellon said. The law allows the HOA to send a written notice to the tenant to pay future rent to the association, not the property owner, until the owner’s account is settled. The complying tenant is covered against any legal liability.
“These are tough times for associations,” Castellon said, “and they have to take tough measures.”
Another tricky area, Castellon said, is what constitutes a permanent part of the house, and what would be considered the property of the house’s owner. This is a grey area, he said, and the law is still sorting through it.
“Quite often, the answer to a question is, ‘It depends,’ “ he said. “When I say it all depends, that’s the hand we’ve been dealt, and we have to play what we’ve got.”
The definition of a permanent fixture, he said, can be interpreted differently by various sides in the prolonged foreclosure battle.

Should I stay or should I go? Is a light fixture a permanent part of a house, or something the exiting owners take with them? The law isn't always clear. (Photo by Michael Freeman).


“What about fixtures?” he said. “A fixture is a part of the real property. What about the big screen TV? What about the pool table? That can be removed, and is the property of the homeowner. But if you installed a large kitchen cabinet, that can be considered a permanent fixture. The question is, was there an intent to make it a permanent part of the property, or something that could be removed if the homeowner moved out?”
Often times, he said, some of the biggest battles in the foreclosure process are over these issues.
To learn more, contact Castellon at 407-851-0201, log on to www.centralflattorney.com or visit his office at 12934 Deertrace Ave. in Orlando.

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