Foreclosure crisis generates some crazy, costly scams for unwary renters

Here’s the scam. Your home is heading into foreclosure. You rent it out anyway. Get first and last months’ rent and deposits. Then blow town with a few extra thousand, leaving behind renters who will be the ones getting evicted. This tale of woe seems to be commonplace in today’s Las Vegas housing market.

If property managers are involved, do they have a legal obligation to check whether a rental home is heading down the ugly road of foreclosure?

I couldn’t get a definitive answer from the Greater Las Vegas Association of Realtors. The Realtors wouldn’t say yes and wouldn’t say no.

The Realtors’ legal counsel, Deanne Rymarowicz, said, “Nevada law requires all licensees to disclose any material fact which the licensee knows or reasonably should know about the property.”

But how hard are property managers supposed to look for those “material facts”?

She offered a helpful consumer tip.

If you’re a prospective renter, the Clark County recorder’s Web site, easily accessed through www. accessclarkcounty.com, posted a news story from KVBC-TV called “10 Steps to Find Out if Your Rental Home is in Foreclosure.”

I used it to check out a complaint by Gerald Foreman, who contends he was scammed by two 79-year-olds. He contends, and they deny, that they knew the property was headed toward foreclosure when they rented it to him.

The owners, Augustin and Margo Rodriguez, former dancers in a specialty act that was part of Cirque du Soleil’s “Zumanity,” insist they weren’t trying to scam anybody and thought they could use the rent money to keep up with the payments. But they fell behind.

At the time they signed the contract with a property manager on Nov. 13, the foreclosure had not started.

But by the time the rental agreement was signed on Jan. 15, the foreclosure was clearly under way.

If Foreman or the property manager had checked records with Clark County Recorder Debbie Conway’s office before signing the contract in January, a breach filed Dec. 14 would have been a warning that foreclosure was beginning, even though the foreclosure sale notice wasn’t filed until March 3.

Someone also could have seen that the homeowner’s association had filed a lien against the couple on Nov. 9, another red flag that the couple had financial difficulties.

Foreman contends Janet McElwain, the property manager at Vanguard Commercial who represented the landlord, had an obligation to run the records before renting the home.

She insisted she legally had no such obligation. She said the landlords have an obligation to disclose, but in this case, the start of the foreclosure began after they became her clients.

Unless and until the 2009 Legislature makes it clear that a property manager needs to run a check for liens and foreclosure actions, it’s up to the prospective renters to be pro-active.

My advice: Whether or not you’re dealing with a property manager, you’d be bonkers not to make the check yourself in this crazy housing market. Checking ahead of time with the Clark County recorder’s office for liens, defaults and breach of contract notices will save renters money, time and aggravation. You can do it online, in person or by phone.

Jill Willis, Conway’s office services manager, said Friday about 10 customers a day are coming into the office after receiving notices they have five days before eviction. Another 50 a day are calling after finding the notices on their door. “They’re usually not crying, but they sound hopeless,” she said.

More people are calling to check the status, and the staff can tell someone over the phone whether a property appears to be in default.

Patty Kelley, president of the Greater Las Vegas Association of Realtors, explained that state law requires property management companies to confirm ownership of the home before signing a management agreement.

“Prior to signing any rental agreement, renters have the right to ask if there are any existing liens on the home,” Kelley said.

But who knows to ask?

Perhaps conscientious property managers should consider running a records check for liens before renting a home, even without being asked. It could save everyone a lot of grief.

But it’s also easy enough to do it yourself.

Jane Ann Morrison’s column appears Monday, Thursday and Saturday. E-mail her at Jane@reviewjournal.com or call (702) 383-0275.