So I was involved in a lawsuit the other day. OK so maybe that’s a bit of hyperbolic link-baiting, but I’m trying to be a savvy blogger as well as a top-notch REO Broker, so you’ll forgive the indulgence. I sure enough was involved in a Cash for Keys Lawsuit, but it was just a small claims court case, and the future of western jurisprudence is hardly to be affected by the outcome.
Here’s what went down: back in July, I was assigned an REO, so I went down and did the occupancy check and met with the (former) owner. He said he lived there, and had some tenants who were renting a room (they were a couple). So I took down everyone’s name, and let them know the bank would probably be offering cash-for-keys and that I’d be in touch again soon.
I called back in a couple of days, once the bank had told me how much to offer and such. The former owner told me then that one of the tenants, the male, was “no longer in the picture” and had moved out. OK, fair enough – I didn’t ask why, it doesn’t really matter why – if he’s gone, he’s gone, more power to him.
I ended up negotiating Cash for Keys with the former owner and the other tenant. They actually got out of there in darn near record time; within 3 days after signing their agreement, they were handing me over the keys to a very vacant and broom swept house. They got their cash and went on their merry ways.
A couple of months later, I got a phone call from the male tenant who had vanished. He said he felt he was owed the same Cash for Keys money that the other occupants had received, because even though he was not there when I negotiated the cash for keys or when I disbursed the cash, that he was still a legitimate tenant and should have received “financial relocation assistance” as well.
The bank that doled out the cash for keys money told me they wouldn’t be paying him, since in their view he had no legitimate claim to any of the money. The occupant ended up filing a small claims lawsuit, against the two other occupants and my real estate brokerage – but, interestingly enough, did not include the bank in the lawsuit.
Our day in court arrived; I had to spend nearly four hours there, sitting through sad case after sorry mess, listening to the judge dispense wisdom and righteous decisions in a dismal spectacle of small claims woe. We were the last case to be called.
It turns out, the reason the tenant was “no longer in the picture” was because he had been in jail for his 4th DUI and then had a restraining order taken out against him by the other tenant. The judge ruled that there was no obligation to pay anyone cash for keys, the banks do it to avoid an eviction (which never took place), and that unfortunately for the plaintiff, due to the choice he’d made to go drunk driving, he was not living in the property at the time CFK was offered – and it didn’t matter if he was a legitimate tenant or not, since the bank don’t have a legal requirement to give him or any occupant any money regardless.
The judge found for the defense (my brokerage, and the other occupants) and off we went, victorious before the bench. To my mind, the outcome was a foregone conclusion and it was a frivolous lawsuit at best, but what can you do? I don’t make the rules, I just play the game and follow them as best I can – which keeps the Silicon REO Group coming out on top.
