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By Felix Adamo
BY JOHN COX, Californian staff writer email@example.com
Much of the confusion at Creekside Townhomes started when a stranger entered the White Lane complex in late December and posted a letter on tenants’ doors.
Titled “Demand to pay rent to party other than landlord,” the letter, written by a Los Angeles attorney, instructed tenants to send future rent payments to the property’s lender.
Almost immediately the townhomes’ manager snatched up the letters. Four days later he issued a memo telling tenants to disregard the lawyer’s “premature” letter and continue paying rent to the landlord.
The confusion, bankruptcy and multiple evictions that followed provide yet another example of how complex and personally damaging the foreclosure crisis has become.
As many tenants learned after reading both letters, the owner had fallen behind on payments to the bank. This led some to question the validity of their lease-with-option-to-buy arrangement with the landlord — a deal that was costing them nearly $400 a month after an initial, nonrefundable fee of $700.
Complicating things further, the landlord filed for Chapter 11 bankruptcy protection on Feb. 27.
Several tenants opted to make no rent payment for January — or February or March.
Among this group of tenants were Oscar and Ebony Moreno, parents of two small children and caretakers of Ebony’s disabled brother. They wondered why they should continue paying to preserve their option to buy if the property owner had defaulted on its loan.
Ebony Moreno decided the landlord could deduct what the couple owed in rent from the monthly option fee they’d been paying since December 2007.
But last month, the couple and four other tenants lost in court. Despite offers by the landlord to work out payments that would allow them to stay, those who have not already left, including the Morenos, are now awaiting eviction.
“I’m looking for a place,” Ebony Moreno said. “I haven’t found anything yet.”
The townhomes’ project manager, Robert Hernandez, acknowledges that the mix-up over who to pay was unfortunate, but he insists the tenants should have paid rent to one party or the other.
“They didn’t pay anybody,” he said, referring to the five tenants ordered to pay back rent or leave. “They didn’t pay the bank, didn’t pay the company — they just didn’t pay.”
The Los Angeles lawyer who penned the original letter declined Monday to comment on the case. But last month he sent Creekside tenants a letter stating that the demand to pay the bank instead of the landlord had been canceled — and that they should resume paying as before.
Bakersfield real estate lawyer Ron Dessy, who is not involved in the case, said he is seeing more cases like this, in which tenants become confused because their landlord has entered the foreclosure process.
Dessy said landlords generally are expected to keep up with loan payments in exchange for collecting option-to-buy fees. And although he was unaware of the details of this case, he wrote in an e-mail Monday that the tenants may have been justified in asking that option fees they had already paid be applied to past-due payments.
A Bakersfield attorney representing the landlord, Sheri Connelly Vining, said the tenants had signed agreements requiring them to continue paying rent until the bank foreclosed on their property, which it did not.
Tenant Richard Rios said that if he had he known Creekside’s owner was behind on its loan, his family would not have been lured in by the possibility of buying.
Late last year Creekside, a gated complex that caters to people with bad credit, quit extending the option-to-buy program to new tenants. Project manager Hernandez said the decision resulted from difficult conditions in the lending market. He added that no one has exercised their option to buy.
Creekside was purchased in 2005 for $3.4 million by Los Angeles-area investor Michael T. Stoller through his 500 White Lane LP, a subsidiary of his Tycoon Investments Inc.
— Californian staff writer Gretchen Wenner contributed to this report.