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Agents to check whether rental properties are in foreclosure

Agents at Heidi Spellman Realty in Port Washington have been directed to check whether properties have lis pendens filed against them -- the first legal step in a foreclosure case -- before showing the premises to renters.

Over the last couple years, stories have surfaced about tenants forced to find new quarters because lenders have foreclosed on their landlords. Often, the renters have no idea until the bank or an agent tells them to leave, and the landlords are nowhere to be found, along with their deposits, renters' advocates said.

Broker owner Spellman, seen here, had one such case when she found a local house for a renter. Her client then went back to get his family from Venezuela but not before paying two months security deposit, first month's rent and broker fees up front, she said.

"All this was $6,500 month, so it's quite a sum of money this person laid out," Spellman said.

Then two weeks later, she said, she saw an open house scheduled for the property, called the listing agent and learned the owner had left for Argentina.

"I said, 'What do you mean you have an open house?' " Spellman recalled. " 'We have a fully executed lease. The people are moving in from Venezuala to this house.' She said, 'Oh, we're having a short sale open house on the house because the house is going into foreclosure.' "

Spellman said she gave back her agency's part of the $30,000 in fees the renter had paid up front.

This sort of checking up is a sign of the times, said Frank Dell'Accio Jr., president of the Multiple Listing Service of Long Island.

"Is it a good idea? As a business practice, it's a great idea," he said.

Dell'Accio, broker owner of Century 21 AA in Lindenhurst, said he has homeowners sign papers before tenants take the place:

"I say to the homeowner, 'You acknowledge here that your home is not in a foreclosure state. It's not fair to the tenant that they're occupying a property that you may not be making a payment on.' "

"I've had tenants who came to me and said, 'I've got to move . . . My house is in foreclosure.' I said, 'When did that start?' 'Who knows? All I know is I've been there for eight months and I got a letter from the bank that said I have to move out.' "

But when it comes agents refunding fees to the renter, that can be a thorny matter.

Dell'Accio said each case is different and each agency must decide for itself what must be done. The case of a renter who must leave two weeks before the lease might be treated differently from the renter who has just started the lease, he said.

"That's something you've got to look at and say, 'What's the right thing to do?' " Dell'Accio said. "You've got to look at your ethics. You've got to look at what you think is right and fair, and what did you do or not do that you could have done to protect the person. If it's easy enough to get the information, then it behooves the agent to do their job correctly."

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