When a new client purchases a property at trustee’s sale…
…they often contact us to complete an eviction if the former owner/ occupant won’t leave. In preparing the file, we have our clients complete an eviction request form, which requires the client to provide us with the “fair rental value” of the property. Many clients are confused by this because they don’t want to rent out the house – they just want possession so they can fix and flip it or move into it. We completely understand this – however, we still need to know the fair rental value for legal and strategic reasons.
This article will clarify two of those reasons. First, when filing an eviction action, even one brought after a trustee’s sale, the owner of the property is entitled to a monetary judgment for the time the occupant wrongfully held possession. In other words, even though there was no lease and the owner doesn’t want to accept the rent, they are entitled not just to get possession but also to get a monetary judgment. Arizona law creates a pseudo-tenancy where the tenant is liable for rent and will be liable for attorneys’ fees and costs if the matter proceeds to an eviction. This is generally known as a tenancy-at-will or tenancy-at sufferance.
The monetary aspect of the judgment is collectible through garnishment. It is also available to be used as leverage when negotiating with the occupant for them to leave. For example, it is common for purchasers of property at trustee’s sales to waive this “rent” in exchange for the occupant vacating the property on an agreed upon date.
Second, the fair rental value is incredibly important in the event that the occupant loses the eviction but decides to appeal the trial court’s decision. In an eviction, like any other case, either party has the right to file an appeal and have a higher court review what the trial court decided.
When a party appeals, they can “stay” the effect of the judgment by paying a bond. This means that the person can delay the writ of restitution and stay in the property during the appeal, by (1) paying a bond and (2) paying the “fair rental value” on a monthly basis.
This bond and rental payment requirement makes the fair rental value incredible important. A purchaser who has a hard money loan on a property may not be able to remove the occupant for the 8-12 months it takes to complete an appeal in Superior Court (longer if the appeal is heard in the Court of Appeals). Therefore, the purchaser would want to ensure that they receive the rent during this time so that they can pay the mortgage. While the rent may not be as much as the hard money loan, it is better than no rent being collected and the occupant living in the property for free. As we always say, when buying properties, buy wisely.
Mark B. Zinman, Attorney
Williams, Zinman & Parham P.C.
To find more information from Mark B. Zinman, please also visit our AZREIA website: www.azreia.org