Residents of the troubled Charlestowne North apartment building saw their first concrete steps toward improving their living conditions last week, when they learned from Greenbelt City Manager Josué Salmerón and Mayor Emmett Jordan that lender Freddie Mac filed for foreclosure and emergency receivership against the building owner on January 31 and February 2, 2024. The next step is for Prince George’s County Circuit Court to act on the filings. The court may schedule a hearing before ruling, or may rule only on the evidence in the filings. Salmerón said he is optimistic there may be a receiver in place within one month.
Implication for Tenants
Salmerón told residents on Saturday, February 3 that the receivership filing asks the court to appoint a receiver, which is a custodian responsible to care for the property and resolve the many code violations. He said receivers are responsible to the court, not the lender or owner. Receivers are often property management companies experienced in managing rental properties, and are typically authorized to collect rent. When a tenant asked Salmerón how to know when to pay rent again, he said the city will tell residents when the court appoints a receiver, the receiver’s name and when the city issues them a rental license. He said this is to assure tenants they have legitimate information and can confidently pay rent to a court-appointed receiver.
Salmerón said Freddie Mac filed for foreclosure and receivership because the owner is not compliant with the terms of the loan, explaining that commercial loans require paying the mortgage, maintaining the property to preserve its value and observing local and state laws.
He said foreclosure is necessary for Freddie Mac to take possession of the property, remove the owner’s property rights and sell the property.
He said the owner could appeal receivership, which he believes would not succeed, given the evidence in the filing of the owner’s pattern of neglect. The evidence includes the city’s documentation of repeated code violations since July 2023. He said the owner has already lost other properties, including Texas and New Jersey apartment buildings now in receivership. Tenants continue to live in those buildings.
City requests to the Prince George’s County State’s Attorney to pursue receivership produced no results. Freddie Mac’s request for foreclosure and receivership is powerful because, as the lender, they have legal status that the city, county and state do not. It also protects the city from bearing the legal costs of pursuing receivership.
City Support Continues
City costs include the work of Planning and Community Development inspectors and staff, Salmerón and the city solicitor. Their efforts include conducting inspections, writing violations, trying to contact the owner, pursuing the code violations as municipal infractions in Maryland District Court and engaging tenants, county and state officials and Freddie Mac. Those efforts produced the evidence used in Freddie Mac’s filings, and those efforts continue. In January a District Court judge heard, and doubled fines for, the first infractions the city submitted to the court in 2023, with more infractions scheduled for a February 14 trial. Salmerón said since December the city has issued $34,000 in new fines, adding evidence against the owner. He also said city staff recently identified the contractor who last inspected the uncertified elevator, confirmed they have a valid contract with the owner and are working with them to inspect the elevator and make it safely available to residents.
Maintenance and Bills
With building maintenance unavailable, several tenants said they are considering hiring contractors for repairs at their expense, though concerned about liability for the Charlestowne North property. One example was a leaking garbage disposal preventing the tenant from using their kitchen sink. Discussion suggested ensuring the contractor is licensed, bonded and insured, and saving receipts.
Tenants continue to receive bills for rent and utilities. Discussion clarified they are not liable to the current owner for rent since September 1, 2023, when the city did not renew the owner’s rental license due to code violations, nor will their credit be affected by withholding rent from an unlicensed landlord. Tenants are also not liable for bills for utilities that are included in their leases.
Some tenants asked about a previous discussion of how to deposit rent in a rent escrow account with the District Court, and asked if they must establish court rent escrow accounts. Fellow tenants said it is not required since tenants are not obligated to pay rent to unlicensed landlords. One tenant suggested that those who do wish to set aside rent, do so with their own bank instead of the court. They reasoned that this demonstrates good faith and retains the funds in tenant hands vs. not knowing how much of a court rent escrow account would be returned to the tenant.
File Complaints
Despite the lender’s foreclosure and receivership requests, it is still recommended that tenants file consumer complaints with the Maryland Attorney General. Doing so establishes tenant claims against the owner, enables the Attorney General to investigate the complaint and hold the owner accountable and further builds evidence against the owner. Examples of valid complaints include bills for rent since September 1, bills for utilities included in leases, damage to possessions from water leaks or mold and paying for repairs the owner did not handle. Jordan emphasized to tenants that only they can submit these complaints because their leases give them legal standing that no one else has.
Tenants Wanda Darden and Hannah Gould are supporting fellow tenants in preparing complaints. Darden said tenants may either join a group complaint by providing their name, apartment number and phone number, or may submit an individual complaint (online or paper) to the Attorney General. Complaints require information including identifying the owner and describing the complaint and desired resolution. Tenants may contact Darden at dardenfinancial@yahoo.com to join the group complaint, or obtain owner and other information for an individual complaint. Darden said over 70 tenants have joined the group complaint as of February 3.
Best for Residents
Darden said, “Receivership is exciting to me. What we don’t want is for [the current owner] to condemn the building before [a new owner] takes over. That’s why this is crucial, and very important, because now they can’t put us on the street.” Resident Tim Perry agreed. “Receivership is probably the best thing that can happen to us.” The meeting ended with a round of applause from tenants for the city’s commitment to them.
