Council adds new protections for tenants displaced by rental building foreclosures

SHARE Council adds new protections for tenants displaced by rental building foreclosures

The City Council on Wednesday took steps to plug holes that have limited the effectiveness of a two-year-old ordinance tailor-made to protect tenants displaced by rental building foreclosures.

The so-called “Keep Chicago Renting” ordinance requires banks that acquire legally occupied rental buildings at court-ordered foreclosure auctions to register with the city, send prompt notices to tenants and give those renters a choice between a one-year lease extension with no more than a 2 percent rent increase or a one-time relocation fee of $10,600.

Diane Limas, a volunteer with Communities United, said housing advocates have knocked on the doors of nearly 100 renters living in foreclosed buildings and surveyed impacted renters to gauge the effectiveness of the new law.

The results were disappointing. In 80 percent of “documented cases,” the new owners “exploited loopholes” that prevented the ordinance from providing the protections intended, she said.

“Oftentimes, new owners would cut off contact with renters after sending the proper notice. By cutting off contact, the new owner was able to remove tenants without paying the relocation assistance fee,” Limas told the Housing Committee earlier this week.

“Having the renters live in limbo — not knowing if they were being provided with a lease or the relocation assistance — would push the renters to leave in frustration if no one informed them of their rights under the law.”

On Wednesday, the City Council moved to end that confusion. The changes would:

  • Require a dated initial notice to be sent to the tenant with an attached tenant disclosure form. Failure to return the form would not excuse the owner from responsibility to pay the $10,600 relocation fee or offer the tenant a rent-controlled, one-year lease extension.
  • Establish a time frame for tenant notification. Building owners would have 21 days after the tenant returns the disclosure form — or 42 days under special circumstances — to notify the tenant which of the two options the owner has chosen to provide. Circumstances will be different if the tenant lives in a hazardous or illegally coverted unit.
  • Extend the same protections to family members renting in the same building under a “bona fide” lease.
  • Clarify that, for tenants occupying illegal units, the owner must either pay the relocation fee or provide another unit acceptable to the tenant.

Frank Avellone, a senior attorney at Lawyers Committee for Better Housing, said it is “a lot less chaotic out there” since the ordinance took effect in September 2013.

But with 3,000 foreclosure-related evictions still going on in Chicago, Avellone said there remains a “lack of communication and some manipulation” between guarantors, banks and tenants.

“These common-sense changes will help close that loop by making it clearer to both banks and tenants whose responsibility it is to do what and, more importantly, when. The original ordinance had no endgame. This places an end game on the whole process and will hopefully make things much more clear,” Avellone said.

Lucy Esquivel, who testified before the committee, is a poster child for the changes approved Monday.

One year ago, the Albany Park apartment where she lives with her husband and four kids was targeted for foreclosure. After being contacted by the bank and verbally offered the opportunity to stay, she filled out the appropriate paperwork, but hasn’t heard a word since, an interpreter told the committee.

“She’s been taking care of the building. She’s been paying for all the utilities and even after all this, the bank is trying to evict her when all she wants to do is try to stay,” the interpreter said of Esquivel, whose children attend a neighborhood school.

“If these changes were in place, there would be a process so this wouldn’t happen to other families like it’s happened to her.”

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