When Whit Prouty and Craig Strong of the Keller Williams Real Estate office do an occupancy check on a piece of property in Studio City, they frequently discover that people are still living there. Sometimes illegally.
Strong and Prouty, who have had an office on Ventura Boulevard in Studio City for a decade, said when the number of foreclosed properties began rising dramatically in 2008 about 60 percent of the houses they checked on were vacant.
It's a different story now.
"Every time I do an occupancy check for the bank on a foreclosure it is always occupied now," Strong said.
He said he is noticing some new trends.
"There are two things going on right now. Even if the seller is in foreclosure, they are renting it out," Strong said. The tenant then gets a knock on the door from the new owner and is told to move. In that case, he said, "The tenant is the innocent party, and the owner is at fault."
The second thing is that some people are breaking the law and moving into a property that is vacant. "They know the system and know, if they set up residence, they can get relocation money or get free rent," Strong said.
Mike Lewis, senior lead officer for the Los Angeles Police Department's North Hollywood Division, said he has noticed a trend in this kind of crime. He said some smart guys find a house that is newly vacated, convince a locksmith that the keys were locked inside, have the locks changed, then advertise the property for rent. They get the first and last months' rent in cash and hand the keys over to the unsuspecting tenant, who moves in -- until a real estate agent shows up to inspect the house.
"It is becoming increasingly a problem in the hills in the bigger houses, especially since so many are for sale," Lewis says.
Real estate agents are finding that more people can't produce a valid lease or copies of rent paid in these foreclosures and have no right to be there.
"Banks, buyers and taxpayers are spending lots of money to evict these people," Strong said.
The only way to prevent this from happening is to change the laws for renters, Strong said. "The banks need to hire more people to make short sales faster," he said. The banks are trying not to overload the market with too much inventory, but things need to be sped up.
Prouty said there are about five such cases going on now in Studio City.