Jonathan Hall Uncovers: Tenant Trap

Melissa Vazquez-Fuentes was excited to find a perfect place to live.

Melissa Vazquez-Fuentes, Renter
"I had just moved out of my mother's house after eight months and I finally found an apartment that I loved."

But her excitement was short-lived. Just two weeks after moving in with her two-year-old son, she got some shocking news.

Melissa Vazquez-Fuentes, Renter
"I found a letter taped to my door addressed to the landlord stating that any occupants that were residing in the unit needed to leave within seven days."

The place she just rented was in foreclosure.

Melissa Vazquez-Fuentes, Renter
"I cried. I cried."

What's worse, Melissa says the owner, who she paid more than $2,000 to, never told her. And she says the realty office she worked with said they didn't know about it.

Melissa Vazquez-Fuentes, Renter
"The landlord went ahead and illegally signed the lease knowing that he was in foreclosure."

Henry Winbush says it happened to as well. He was renting a room in this multi-family home in Roxbury.

Henry Winbush, Renter
"I had been paying approximately $500 a month."

But after paying rent for four months, Henry found out he was living in a building in foreclosure. The paperwork had been processed months before he even moved in.

And, according to Henry, the woman collecting the rent was not the landlord, but a former tenant.

Henry Winbush, Renter
"It was shocking. I had given her over $2,000 by then."

It's a new scam spurred by the mortgage crisis and it's happening to more and more people. 

Marc Charney, Charney Real Estate
"We're seeing in the market, a situation where the foreclosure rates are increasing. With the economy being as bad as it is right now, these people who are basically perpetrating this behavior are just taking advantage of the people, by exploiting their vulnerable situation."

Not only is it sad, it can be illegal. If the person renting out the foreclosed property knowingly deceives the prospective tenant, he or she can be held financially responsible under the Massachusetts Consumer Protection Law.

And the law protects the renters as well.

Barbara Anthony, Mass. Office of Consumer Affairs and Business Regulation
"No individual can kick you out, can evict you. That has to be done through a court order."

If you find yourself in this situation, contact the financial institution involved in the foreclosure right away.

And you need to keep paying rent to the property's legal owner, even if that means putting it in escrow. If you stop paying rent, you could lose your rights as a tenant.

Barbara Anthony, Mass. Office of Consumer Affairs and Business Regulation
"You have to be a tenant in good standing."

And that good standing could help you take legal action to try to get your money back.

Barbara Anthony, Mass. Office of Consumer Affairs and Business Regulation
"They should probably consult with an attorney to demand that the funds be returned."

So before you move in, watch out for warning signs.

If your prospective landlord does not ask you to sign a lease or doesn't do a credit check, that could mean trouble.

You can also check the state's registry of deeds website to find out if any foreclosure documents have been filed for that address.

Melissa is now fighting to get her money back and Henry says he won't be fooled again.

Henry Winbush, Renter
"I learned a big lesson. I'm more cautious now."

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