The verdict is in, trash the house and you could be going to jail. In at least one precedent setting case the former owner has been found guilty on all charges, including grand theft, and could be going to jail for 4 years. See News10 story here.
It is not uncommon to see appliances from foreclosed homes being sold online or witnessing owners selling everything at a weekend garage sale. People will buy anything that they can carry including interior doors, light fixtures, kitchen cabinets, bathroom vanities, fireplace inserts and even the flooring.
When something is permanently affixed to the property it is no longer personal property but becomes real property. A fixture becomes part of the asset that is the security for the loan as outlined in the Deed of Trust. This means that when the bank forecloses for non-payment they are repossessing the land and the home as well as the fixtures.
Then there is the vandalism. If you have ever read the terms of a Deed of Trust you will note that there is a clause that says you agree to keep the property in secure and reasonable condition. . “Borrower shall not destroy, damage or impair the Property, allow the Property to deteriorate or commit waste on the property” (Deed of Trust form 3005-6A(CA)(0207)
Without prosecution for such “waste” it appears that destroying a property is only a moral crime, a victimless expression of rage. The neighbors and real estate community would commiserate on the sad condition of the property and debate whether or not it was justified vandalism. No one thinks that this could potentially be a crime scene.
This may be changing given the recent verdict. It would now appear that some lenders are fighting back and former owners and their insurance companies are being held accountable.
We have long expected this but the judicial system takes time to prosecute a case. After two years this former homeowner should be on their way to financial recovery and ready to buy a home in another year. Instead, they may be relocating to a small jail cell, losing their job, losing their right to vote if a felony and gaining a criminal record for the rest of their lives.
If you are a REO Agent or Investor you may want to make some copies of the News10 article and leave them with the former owners you contact after Trustee Sale as a cautionary tale for them and a little protection for yourself.