Some homeowners continue to maintain their property during a foreclosure, but not all. It’s not unheard of for a disgruntled owner to break windows, pour concrete into toilets or paint on the floors, smash the thermostat, or purposely leave the water running.
But punching a hole in the wall or removing the bathroom fixtures, while perhaps emotionally satisfying, comes with consequences. You might lose a “cash-for-keys” offer, pay more for a deficiency balance after the sale, or even worse, face criminal charges.
Your Rights and Responsibilities During Foreclosure
You have the right to continue living in your house at least until the foreclosure sale takes place, perhaps longer depending on if your state has a law that lets homeowners remain in the property through a post-sale redemption period. Even so, your ownership status doesn’t allow you to damage the property purposefully. You’re still responsible for maintaining the home in good condition because when you signed your mortgage documents, you likely agreed to protect the lender’s security interest (the house). Damaging the home would breach (break) the promise not to devalue the home.
Intentional Damage to the Home and Foreclosure Stripping
Homeowners going through a foreclosure sometimes intentionally devalue the home by either destroying the house or removing “fixtures” (items permanently affixed to the structure or land) that must remain in the home under the law. This practice is known as "foreclosure stripping." Fixtures include the oven and built-in microwave, countertops, kitchen cabinets, light fixtures, ceiling fans, plumbing, in-ground landscaping (bushes, trees), etc.
While a homeowner has every legal right to remove personal property—like clothing, furniture, televisions, and gardening tools—the foreclosed property includes both the house and all of the fixtures, as well. To figure out if something is a fixture, you can ask yourself whether removing the item would cause physical damage to the home. If it would, the item is probably a fixture.
What Are the Consequences of Devaluing a Property in Foreclosure?
Damaging a foreclosure property or stripping it of its fixtures comes at a price. Here are examples of the consequences you could potentially face.
You Might Lose a “Cash-for-Keys” Opportunity
Many lenders will offer a homeowner money to leave the property voluntarily, commonly known as a “cash-for-keys” deal. The cash-for-keys amount usually ranges from a few hundred dollars to a few thousand dollars. Keep in mind that the bank might raise the offer if you hold out for a higher amount.
Once you take the deal, the lender will give you a deadline to move out. You must leave the home in a “broom swept” condition, which means that you must remove all of your personal property, not cause any damage or remove any fixtures, and tidy up the place. You can expect the lender to require an inspection before giving you the money.
You Might Be Responsible for a Deficiency Amount
When a house sells at a foreclosure sale for less than the amount owed to the lender, the remaining balance is called a "deficiency." In some states, the lender is entitled to a deficiency judgment (a personal judgment against the mortgage borrower). This judgment allows the bank to collect the unpaid balance from the borrower using regular collection methods, like taking money out of the borrower’s paycheck each month (wage garnishment) and draining funds from a bank account (bank levy).
As a result, if you live in a state that allows for deficiency recoveries, and you lower the value of a house by damaging it or stripping out the fixtures, you might end up paying for it by way of a large deficiency judgment.
You Might Face Criminal Charges
Your actions could have criminal repercussions, too. For instance, if you set the home on fire, you stand to be arrested for arson and charged with a felony. If you steal the fixtures, you might be accused of theft. Although many lenders won’t bother pursuing a criminal action, by some accounts, it’s happening more frequently. And the district attorney can always bring charges without the urging of the lender.
Other Potential Consequences of Damaging Your Home While It's in Foreclosure
Finally, the lender might sue an offending homeowner to recover the cost of the repairs. The bank could proceed under a clause in most mortgage contracts, which prohibits the owner from destroying or damaging the secured property. But because the foreclosed property owner often doesn’t have money, suing is rarely worth the effort.
Hiring a Foreclosure Lawyer to Help You Through Foreclosure
Foreclosure law is complicated, and the facts surrounding each case are unique. If you need advice about which items are considered fixtures and must remain with the property, as well as the possible consequences of being accused of foreclosure stripping or damaging the home, contact an attorney.
About the author:
Amy Loftsgordon is a legal editor at Nolo, focusing on foreclosure, debt management, and personal finance. She writes for Nolo.com and Lawyers.com and has been quoted by news outlets that include U.S. News & World Report and Bankrate. Amy received a B.A. from the University of Southern California and a law degree from the University of Denver.