On Memorial Day weekend, a man knocked on the door of Sheila Walker's Wildwood apartment and presented her with an offer: $1,500 to vacate in three weeks. The three-unit building had been seized in foreclosure.
According to Walker, 45, neither the man nor the real estate office he represented ever told her that New Jersey law gave her the right to stay put.
She panicked, she said. How would she find an affordable place at the start of the busy summer season?
New court rules and a proposal in the state Legislature are aimed at sending a clear message to tenants such as Walker: Your landlord may lose the property to foreclosure, but you won't lose your home.
State Supreme Court rules that went into effect last month bar a final judgment of foreclosure until the foreclosing creditor has notified tenants of their right to remain in the property. The sheriff overseeing a subsequent sale by the creditor must post a similar notice at the building.
The legislative proposal, which is awaiting a floor vote in both houses, would require another notice after the property is sold that specifies to whom tenants should pay rent.
The proposed law would allow property owners to offer "cash-for-keys" buyouts such as the one given to Walker. But tenants must receive a notice that explains that they have the option to stay.
New Jersey's laws are stricter than those in most states. They forbid the eviction of tenants - with or without a lease - from foreclosed buildings without cause, such as failure to pay rent or occupancy by a new owner.
Under Pennsylvania law, it is possible to remove holdover tenants, with some exceptions, through an ejectment process in a county court. A federal law signed in May requires leases to be honored in foreclosure and gives tenants subsequently asked to leave, including those renting month to month, at least 90 days' notice.
Since last December, when the New Jersey Department of the Public Advocate began looking at how to help tenants, the office has heard from people in about 200 rental households caught up in foreclosure confusion.
Some, like Walker, are worried they will be forced out. Others do not know where to take maintenance complaints or rent checks.
Between November 2008 and October, New Jersey saw 60,706 residential foreclosures - an average of more than 5,000 per month.
Much has been made of finding ways to keep homeowners out of foreclosure. Catherine Weiss, director of the state Division of Public Interest Advocacy, said little attention had been paid to tenants, though a third of all occupied residences in the state are rentals.
"Many tens of thousands of tenants have been caught up in the foreclosure crisis, and only a small percentage of them get to us," Weiss said. "I have no doubt that many of them have been persuaded to leave" their homes.
The notification procedures her office has pushed for would have put Walker's mind at ease. Instead, she said, she began packing. After seeing a newspaper article about tenants in foreclosure, Walker called the state public advocate.
"She was just beside herself," said Donna Jago, director of citizen relations, who first spoke with Walker in July. "She didn't know where to turn, and she was dealing with a Realtor that was giving her misinformation."
Walker said that the office of Jean Ball, a RE/MAX agent in Northfield, told Walker to stop paying her $750 rent as part of the cash-for-keys deal. In August, Walker was served an eviction notice for failure to pay rent. She said she felt duped.
Ball would not comment for this story. Her online profile says she specializes in bank-owned properties in South Jersey. Real estate agents or other local entities typically are hired to manage such properties, implement the cash-for-keys offer, and handle the listing when a creditor attempts to sell the newly acquired property.
Wilshire Credit Corp., owned by Merrill Lynch, services the loan on Walker's building and is responsible for the foreclosure proceedings.
Bill Halldin, a spokesman for Merrill Lynch, would not speak specifically about Walker's case, but said the company followed all state and local laws and would assist tenants who chose to relocate.
Having a building occupied is not an obstacle to selling the property, he said. "New owners will purchase properties with tenants and without tenants," Halldin said.
Because Walker had receipts showing that she had paid her rent on time, Jago said her office was able to get the eviction dismissed.
Jago said Walker's case was not unusual. She has helped others who faced unlawful evictions.
"Some of these Realtors, I think they know exactly what they're doing," Jago said. "Some of them don't."
Real estate agents do call her office looking for guidance, she said.
Walker, who is a seasonal cook now out of work, credits Jago for keeping her in her home, but she has not unpacked her belongings.
A sale is pending on the property. If it is bought by someone who plans to make it his or her own home, she may have to leave. In the meantime, she said, she is talking regularly with Jago.
The proposed legislation also would require creditors to report foreclosures to municipalities so local officials could track economically at-risk neighborhoods.
It would give municipalities the authority to push creditors to maintain their properties or to fix violations themselves and charge the creditors. Weiss said her office had heard from families in apartments where the ceiling was falling in on a child's bedroom because of deferred maintenance. Hundreds of New Jersey tenants in foreclosed properties where utilities were included in the rent have had their services shut off, she said.
Weiss hopes the Senate and Assembly companion bills will be voted on during the lame-duck session next month. The proposal would take effect within 30 days of the governor's signature.
Laura Battles, 59, of Newark, who has been an advocate for the legislation, found a note on the front door of her four-unit walk-up in May saying the building was in foreclosure and directing tenants not to pay rent to the landlord. Two weeks later, she received another notice from an attorney for the bank that took ownership of the building requesting that she move. She called the attorney, saying she didn't want to leave the home where she had lived since 2002.
"They told me to get an attorney and that I'd have to fight them," she said.
Battles, who sells rare books from her home, could not afford a lawyer of her own. She knew about the anti-eviction law and called the Public Advocate's Office. The other tenants have moved out; Battles has stayed.
She has spoken at a news conference for the Public Advocate's Office and before a legislative committee on behalf for the bill that would prevent other tenants from finding themselves in her position.
Spokesman Robert Corrales said Gov. Corzine had not taken a position on the bill and would review it if it reached his desk.
Tenants in foreclosed properties who need assistance may contact the public advocate's office at 609-826-5070.