60 days to leave property?
The property we've been renting for the last 2+ years went into bankruptcy and is finally now coming to auction this week. I've spent some time on the courthouse steps to see what is possible, and have learned a lot about the process (it's erratic, lots of deferrals, lots of regular pro investors).
While I was thinking I may be able to buy the property if the opening bid gets discounted, I know this will cause a bidding frenzy among the pros. If it doesn't get discounted, it will revert to the lender as it's way underwater.
So, my questions:
1) I believe the current law provides me 60 days to leave the property. I know an investor and maybe the banks would want to do cash for keys, but as it is I don't think I can even find a place in 60 days.
2) I met one of the pros at the auction and got his number. I was toying with the idea of using him to buy the house for me, presumably for a large fee. But I'm leery of giving these guys more information that would help them bid against me if I decide to DIY.
Ironic, I joined this forum/site intending to invest, but now have become another casualty of the market like all the rest.
Thanks for your replies.
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Comments
With regard to buying the house at auction the primary issue to figure out is how to come up with the cash. You could work with someone at the auction to buy it for you and then resell it to you if you don't have the cash. Might be worthwhile for them to work with you vs. having to evict you and find a buyer, but don't expect to share much in the discount they get at auction - you aren't taking the risk, putting up the cash, etc. If you do have the cash, it might be worth trying to buy at auction, just be really sure to know the title situation. You'll have three HUGE advantages over the other bidder. One, you will know the condition of the property, two, you won't have to factor eviction costs into your purchase, and three, you aren't buying for profit, so even if you only save 10% vs. market it is a good deal for you where as it wouldn't be for them.
As far as what happens if the bank or investor takes the house back at auction, I would strongly recommend taking cash for keys. If 90 days isn't enough time, then it sounds like you should start looking now. You need to face the fact that unless you buy the house you WILL be moving. That said the law currently says you can stay there for the remainder of your lease (so long as it is at market rates), and if you don't have a lease, then yes, they are required to give you 60 days notice before filing an eviction lawsuit against you. Note that is not really the same as "90 days to leave". If you are willing to have a lawsuit filed against you, and ultimately a judgment, and a Sheriff at your door than you really have maybe 120 days to leave.
The house did indeed sell at auction, but back to the bank. I was on hand with checks but the opening bid (greatly reduced) was still above what I had in my pocket. Now I'll see if I can buy it from the bank, I hope.
To correct a typo/mistake above and to help future people in my situation:
Public Law 111-22, effective May 20, 2009 (and in force until Dec 31, 2012) gives tenants at least 90 day notice. Tenants who have a valid lease will still have that lease in effect through the end of the lease, unless the new owner wants to live in the property, in which case they have the same 90 days.
You are right about the tenants rights law. This is exactly why banks and investors offer cash for keys. They offer money so that they can get the tenants to move faster. This is all subject to negotiation. Most tenants know that they have to move anyway and would prefer to use the CFK as a deposit and get relocated sooner rather than later. Then you have others that prefer to be evicted even though this will result in an unlawful detainer being filed against them and having that potentially jeopardize a rental credit check. Keep in mind that if you are going to stay through your lease term that does not mean you get to stay for free.
Keep us posted if you are successful in buying it from the bank.
I can understand from the investors' perspective why you and Sean would take the bank/owner side ("prefer to be evicted"), but consider the human aspect of it - it's winter, holidays just over, and I've got to find a rental for a family of 5, with a dog. Oh and I've been laid off since November, making it even more difficult. Not looking for sympathy here, just saying, the decision to take cash for keys is not always cut and dry.
The firm claiming to represent the bank (I still have no proof that they do) sent a snippet allegedly from the bank where they want us to present proof of assets, preapproval letter, an offer, and then they want 3 days to list the property, and will take best offer. If I agree to all that, I'm sure I'd be waiving my 90 days, so clearly this isn't going to happen. Guess I'll just get a different house at auction.
Hi David - There is no doubt that moving stinks and is never easy, especially with kids and a dog. I actually read somewhere that it is among the most stressful life events possible. Still I think the cash-4-keys decision is extremely cut and dry if you fully understand the consequences.
1. You technically owe the bank rent from the day of the foreclosure - this is usually simply forgiven if you accept cash-4-keys.
2. You may have difficulty recovering your security deposit from the prior owner, so the cash may be critical toward 1st and last on your next place.
3. Once the notice period is up the bank will file a lawsuit against you. Lawsuits are public record and may affect your ability to rent going forward.
4. At the end of the lawsuit you will be removed from the property by the Sheriff if you don't move before.
5. The court WILL award the bank a judgement against you for rent for the entire period you remained in the property.
I'm not pointing these things out to be mean, or to take the "investors" side. They are simple reality and it bums me out seeing homeowners stick their head in the sand and make a bad situation worse (for them).
As for the snippet from the REO firm it is basically saying that you have to do exactly the same thing than ANYONE who wants to buy a house has to do. I'd be very surprised if they let you stay for the period the home was listed, as that would adversely affect their ability to get the best price... and that is their job. Again, I'm not trying to be harsh - but I'd recommend putting your energy into finding a new place to live, as the reality is that you will likely be moving.
For what it's worth, I recommend renters with a lease take advantage of Public Law 111-22, PROTECTING TENANTS AT FORECLOSURE ACT, and stay until the end of your (up to 1-year) lease, especially if there is substantial time remaining on that lease. Most REO banks will wait until your lease is terminated before marketing the property. The REO owner cannot unilaterally change the terms of your lease.
I disagree Tom. I think most renters will do better negotiating cash-4-keys. Keep in mind the new owner has NO obligation to return their deposit as they never received it, so if the homeowner stays until the end of the lease they will find themselves in a tough position coming up with the deposit for the next lease. By negotiating a cash payment in exchange for moving they may be able to get sufficient cash not only for a deposit, but maybe even first and deposit. Plus they get to move on with life now rather than worrying about having to move when the lease expires.
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