AG Coakley Reaches Settlements with Real Estate Company and Broker for Serving Alleged Deceptive and Threatening Notices to Tenants of Foreclosed Properties

BOSTON, MA – May 13, 2010 – (RealEstateRama) — AG Coakley has reached settlements with a Fairhaven real estate company and a real estate broker for delivering alleged deceptive notices to tenants living in foreclosed properties in Roxbury and southeastern Massachusetts in an effort to unlawfully break their lease agreements and remove them from the properties.  The notices allegedly threatened to remove the tenants and their belongings from the premises if the defendants were not immediately contacted.The Assurances of Discontinuance filed yesterday in Suffolk Superior Court against RE/MAX Classic of Fairhaven and real estate broker Simone Schettino provide a broad range of relief and preventive measures to ensure their future compliance with state and federal consumer protection laws.

“We are facing critical housing needs in the Commonwealth and the strain of foreclosures has shown its affects on everyone.  State and Federal law protects a tenant’s right to live in the property for the remainder of the lease period even after a property has been foreclosed and sold to a new owner,” said AG Coakley.  “Their tenancies, and therefore their right to remain in their homes, simply do not dissolve because of a foreclosure or resale of the property.  Tenants of foreclosed properties cannot be forced out of their homes and the use of deceptive notices threatening illegal acts by realtors, brokers and landlords will not be tolerated in Massachusetts.”

Last Spring, housing advocates provided the Attorney General’s Office with a copy of a notice served by RE/MAX Classic to individuals living in a foreclosed property in New Bedford.  The notice threatened to illegally change the locks on the property if the occupants did not call the broker within 24 hours.  RE/MAX Classic allegedly served similar notices to individuals in multiple properties.  Similarly deficient notices sent by Schettino to individuals residing in a foreclosed property in Roxbury were provided to the Attorney General’s Office by an affordable housing and tenants’ rights organization in Jamaica Plain.  The notice threatened to remove all property of the occupant if the real estate agent was not contacted.  The Assurances of Discontinuance prohibit RE/MAX Classic and Schettino from delivering notices or communicating statements to occupants of residential buildings if those notices contain statements that are unfair or deceptive or threaten an illegal act.  RE/MAX Classic must pay a penalty of $10,000, with $7,500 suspended, including $1,000 to South Coastal Counties Legal Services and $1,500 to the Local Consumer Aid Fund.  Schettino must pay $500 to the Local Consumer Aid Fund.  RE/MAX is also required to provide six free seminars that are open to the public and will provide information to homeowners and tenants in buildings facing foreclosure about their rights.

Both Assurances also require any future notices to tenants to include the following language:
“(Name of lender) is now the owner of the property you live in.  (Lender) bought the property at a foreclosure sale which occurred as a result of the prior owner – your landlord – defaulting on his/her mortgage.  If you have not already done so, immediately stop paying rent to the prior owner.  The foreclosure sale has not changed your tenancy.  You are still responsible for your rental payments.  If there are any problems with your unit or the building, or if you have any other questions, please contact (name of contact).”

Both federal and state law provide tenants with specific rights concerning evictions after foreclosure.  Under the law, tenants with a valid lease are permitted to continue living in the property for the term of the lease and both landlords and or their brokers are prohibited from altering the lease terms.  As an advocate for consumer rights, AG Coakley’s office works to protect Massachusetts residents and businesses from unfair, deceptive, and otherwise unlawful conduct that causes consumer harm.  The Attorney General’s Office has taken a multifaceted approach to combat the foreclosure crisis and predatory lending by taking both civil and criminal action against individuals engaging in fraudulent activities and foreclosure scams.

For additional information for tenants living in foreclosed buildings, please visit the Attorney General’s website.

This matter was handled by Assistant Attorneys General Patricio Rossi and Jeanne Veenstra of AG Coakley’s Civil Rights Division.

Contact:
Grant Woodman
(617) 727-2543