can a landlord legally charge rent during forclosure...
Submitted by tank626
from CA
- 01/07/2009 - 1:14pm
can a landlord legally charge rent during forclosure process?
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Absolutely!!!
But if the loan started before the lease, then the lease is nullified, so why couldn't you stop paying the rent to the owner who is not servicing the mortgage?
The lease or rental agreement would not be wiped out by the foreclosure until after the property is sold at auction and the trustee's deed is recorded. And even after the lease or rental agreement is wiped out by the foreclosure sale, the new owner is likely still entitled to fair market rents from the holdover occupant. We've received many judgements against holdover tenants for rent. Always amazed me that folks would rather fight the eviction only to end up paying rent for the entire time they were there instead of accepting my offer of cash for them to move out and leave the house clean.
yes he can definitely charge you rent until the house is sold at auction. It is his house until the house is sold.
Yes, unless the mortgage company has invoked the Assignment of Rents which will require you to pay your rent directly to the owners mortgage company.
Paul Vojchehoske
www.operationlandlord.com
I moved in with my boyfriend and he did not tell me his house was in foreclosure. I loaned him money and now I am moving out, he is trying to deduct money from the loan for rental payments. I know he did not make any mortgage payments since I been living here...4-1/2 months. Can he do this? We have not contract or rental lease between us.
Under a regular rental agreement the rent would be legally due regardless of whether or not that owner was current on the mortgage payments.
It sounds like you had a verbal agreement to pay rent so it would largely depend on that agreement. This sounds like a good case for small claims court. Let the judge examine all of the facts and evidence and make a ruling. The fact that he is not making the payments may work in your favor in this case since there was no written agreement.
I have a rental that went into to foreclosure after months of trying to work out a modification. Now I'm working out a repayment plan with the lender to get the rental out of foreclosure. During this time the renters in the rental property found out the property was in foreclosure and now are refusing to pay rent for the last two months. The property has no sale date, and I want to know if I have legal grounds to take them to small claims and or evict based on violation of the six month lease agreement and none payment.
Evict them, the UD judge probably will only consider the failure to pay rent. Good luck renting it again, who will want to rent it when it is in default? Would be better if you tried to work with the tenants first, but if they won't pay rent, eviction is an option.
Thanks Richard, but have another question, does filing for chapter 13 keep the property from going into to foreclosure?
Also, what's a UD judge???
HI Don,
The UD judge would be the judge presiding over the unlawful detainer lawsuit.
A bankruptcy would create a temporary stay of the trustee sale but would not completely stop a sale. During a BK, especially a chapter 13, the landlord could complete a workout program with their lender.
I have been renting to own for over a year and just got notice that the house could foreclose. $150.00 of my rent was supposed to go toward the down payment for the house, should i get that money back along with my deposit? And do i keep paying rent in the mean time?
Hi Kathleen,
Unfortunately the lease option is probably dated after the foreclosing Deed of Trust (the date when the loan was originated not when it went into foreclosure) so your agreement would be essentially "wiped out" in a foreclosure. This would mean that the monies you have paid that are held with the current owner would need to be collected from them. If you are not prepared to act on your option and purchase the property then you will need to make some serious decisions. You may want to contact the current owner and find out what is happening? Are they trying to modify the terms of the loan?
Although legally you are obligated to continue to pay rent on a property regardless of whether or not the loan is paid current many tenants stop paying their rent because they know that it is unlikely that a landlord that is losing the property will pursue an eviction. The first step would be to communicate with the landlord then you would want to seek legal advice to determine how you want to proceed.
I have been renting a condo for the past 7 months and 3 months ago recieved notices of default on my door from the homeowner association saying my landlord hasnt paid his fees in almost a year and they were putting a lien on my home.I then recieved a notice saying my home was being auctioned in september.I contacted my landlord and he just tells me to ignore these notices and rip them up!Is their a way to know for sure if my home is going to be sold...and also how long do I have to move out if its being auctioned in september?
HI Jesika,
You are in a bit of a unique position because it is the HOA that is foreclosing and not a lender.
The HOA can in fact foreclose on the property. Their lien would typically (varies from state to state) be junior to the loans on the property which would mean that if they foreclose they would take title to the property but they would still be responsible for the outstanding loans. If they do not pay the mortgage then the lender would undoubtedly foreclose. All of this would take more time.
Although the HOA could evict you after the sale they would be required to give you 90 days notice. They could also enter into a new rental agreement with you and they may be able to legally collect rent. Since most properties are over encumbered (more is owed on them then what they are worth) it is likely that they will not pay the mortgage and will simply wait for the lender to foreclose.
If you are in one of the 5 states that we cover you are welcome to email the support team at ForeclosureRadar. You can also contact a local Realtor in your area that specializes in distressed property and they can look up the information for you as well. On the notice that you received should be a phone number and a TS# for the trustee. They usually have an automated line where you can check the status of the sale.
Hi,
I got a property that is currently in foreclosure and the bank has bought the house back in the sheriff sale but haven't got an eviction notice as yet. Would it be possible for me to rent the house, I mean legally? I've told the possible new rent ors that the house is in a foreclosure, can they rent the house and just skip on payments?
If the property has gone to trustee sale you and gone back to the bank you no longer own the property and have no legal right to rent it. This may fall under the rent skimming laws but in any case would be as illegal as renting a home you have recently sold.
Am at my mother in laws house but not technically hers its under her brothers name they havent paid the morgage since the 09. And i have the light and gas bill under my name . Notices been comming that the house been on foreclosed and sold and going to auction on 11\11\11 . Can she still collect rentt ? Or kick us outt ? Because those are her intentions ?
Hi Lylibeth,
The rent is technically due regardless of the status of the payments on the loan. Oftentimes a renter will stop paying rent because they do not believe that a landlord will go through the expense of an eviction if they are losing the house. A landlord does have the right to evict non-paying tenants until the foreclosure is complete. At that time the property is owned by the bank or the the investor and it would be up to them to give you the appropriate notice and evict you from the premises.
My bank will proceed foreclosure on 10/22/211. My renter want to rent 6 more months which they dont know is under foreclosure. Should I take a chance to make extra money and avoid being sue if they got evict within 30 days notice. I am in Texas. Thanks million.
Hi Lisa,
Not sure about the specific laws in Texas but in a court of moral opinion I think that this is a despicable question. If you decide to do this then your tenants have every right to take you to court. Keep in mind that in the world of foreclosures the tenant is seen by all of the elected officials and judges as the true victims of this foreclosure crises. In CA they would throw the book at you and a small claims court would certainly rule in favor of your tenants.
No, you should NOT SCAM your Tenant anymore than you already have by concealing the fact that you have not paid your mortgage. Hopefully KARMA will pay you a visit soon. Maybe someone will SCREW you and/or your family soon - I sure hope so.
@ lisa, how about if we just call you what you are - a filthy little: ROACH.
I have been renting the home I am in for the past year. When my lease was up last month, my landlord called me and told me that his attempt to refinance the home failed and that the house is now on a short sale listing. We signed another month to month contract with a lower monthly rent. After I signed the contract I received a delinquent mortgage notice and a change of title or deed (I can't remember). Does this mean that the house is no longer under his name? and also should I be paying rent to him or to the bank? if after the 90 days the house goes into foreclosure and of course the house has not been sold, does it mean that I would be kicked out?
HI Mane,
You would need to verify what "notice" you received in order to tell when this home actually stands in the foreclosure process. You could have weeks and you could have months or more before the property goes to sale. Once the property goes to sale you would be given notice (under the Protecting Tenants in Foreclosure Act) the lender/investor would be required to give you 90 days notice.
A local Realtor in your area should be able to assist you with understanding the foreclosure process in your state.
The home I rent in CA is in foreclosure, I negotiated verbally with the landlady to pay reduced rent for Dec & Jan. I tried to specify terms for Paying reduced rent if the Trustee Sale goes thru any months past then, so that I would not only get the original deposit back, but to get a prorated amount for the partial month. We're trying to work this out in email after a phone conversation. I get the email from her this evening saying that in the case of a partial month where the transfer of ownership occures within the last 10 days of the month she does not owe me any prorated rent for the balance of the month. Then she said if I don't agree to this by tomorrow tho original rent (higher rate) applies. OK, I get that she thinks she can pressure me to agree by a date, forcing me to either agree to the "no proration" deal or revert to the original higher rate, but.... I believe that once the Trustee sale takes place, Once the new rate is agreed upon, a propation is due me, because after ass TRANSFER OF OWNERSHIP is just that, it is not legal for her to keep rent & deposit after she loses possession of the home. Am I right? Can I take her to small claims court if I agree to this to get the lowered rent with my own disclaimer & she doesn't prorate rent back to me (& the original deposit) What chance do I have of getting money form a small claims case if she's in another State & doesn't show up for the Court appointment?
Hi Julie,
This is really an interesting case. Essentially you are trying to negotiate a future event with no guarantee that the landlord will actually honor the terms of your agreement. Your only recourse would be to file in small claims court. If she failed to appear then judge would be able to rule on the case but then there is the collection issue.
If I were you I would go ahead and take the reduced amount and get it in writing. I am not sure I would be worried about the pro ration agreement since you could seek that in small claims court along with the return of the security deposit. The courts tend to rule in favor of the tenants in these cases. She is lucky that you are still paying rent. Although the rent is technically due and she can evict you for non payment regardless of the loan status most owners do not go through the hassle and expense of evicting a tenant if they are losing the property anyway.
Hi, Michelle,
(yes, interesting) I did some research last night & found that the Davis Stirling Act contains info regarding Rent Skimming & that she would be liable to the new Owner, with a 99% chance of that being the Bank in this case. If I paid the Jan & Feb rent in full, & then paid the rest of the rent day by day ( I have access to auto deposit electronically into her account) I'd guess that puts me in a compromising situation so she MAY decide to evict me. Shehas promised to return my original deposit. (....?)Maybe I should just stop paying after January since the NOD was in Oct 5th, & the expected Trustee sale if they follow the minimum time sequence would put the sale at last week in Jan, then transfer of ownership in Feb 2 weeks later. That way I can "use the last month's" for Feb, & she'll leave me alone, ya think..... I can't believe she's want to put herself in the position of rent skimming.... AND she was actually a Real Estate Agent in Ca for 8 plus years.....
Hi Julie,
Keep us posted. The fact that she is a licensed agent will only hurt her case. It sounds like you have done your homework. If she is truly walking from the house I doubt she would pursue the eviction if you stopped paying. You just never know!!
I own a house jointly with my soon to be ex-fiance. WE owe 400,000.00 on a home that is now worth 237,000. I am filing chapter 13 but he refuses to do also. I know the bank will forgive my interest in the property but what legally can he do since all the burden of debt will be his. I own other property that is in an LLC. What can I do so he doesnt try to attach to them? I live in Florida.
Hi Bea,
This sounds like a good question for your BK attorney. You are filing a ch 13 which is a reorganization. You are including the debt on the property and you may want to include your soon to be ex just in case he tries to come back and collect on any other debts.
looking in the news paper and i see the townhouse im renting going up for trustee sale feb 1, my landlord text me tonite and told me i have to b out by jan 31. can he do that? 6 days notice? my lease is up in feb but i wont be able to move till feb 1. what can i do? i have 3 kids and a dog. will the bank lock the doors on feb 1 or will they let me move my stuff out? the landlord gave me no notice of the foreclosure. he just said i need u out because some people want to buy the house. what can i do?
@ Nicki, Assuming you have a lease, or month to month lease, and that the owner is not a relative, the PTFA of 2009 REQUIRES that you CANNOT be evicted/removed from your home until AFTER the owner provides you with a 90 [ninety] day written notice. Give your Dog a hug for us! Just google "PTFA 2009" or here it is in full:
Protecting Tenants at Foreclosure Act of 2009
Effective May 20, 2009 through December 31, 2014
SEC. 701. SHORT TITLE.
This title may be cited as the `Protecting Tenants at Foreclosure Act of 2009'.
SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY.
(a) In General- In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to--
(1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and
(2) the rights of any bona fide tenant, as of the date of such notice of foreclosure--
(A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or
(B) without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1), except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.
(b) Bona Fide Lease or Tenancy- For purposes of this section, a lease or tenancy shall be considered bona fide only if--
(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
(2) the lease or tenancy was the result of an arms-length transaction; and
(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy.
(c) Definition- For purposes of this section, the term `federally-related mortgage loan' has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2602).
SEC. 703. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES.
Section 8(o)(7) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended-
-
(1) by inserting before the semicolon in subparagraph (C) the following: `and in the case of an owner who is an immediate successor in interest pursuant to foreclosure during the term of the lease vacating the property prior to sale shall not constitute other good cause, except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner--
(i) will occupy the unit as a primary residence; and
(ii) has provided the tenant a notice to vacate at least 90 days before the effective date of such notice.'; and
(2) by inserting at the end of subparagraph (F) the following: `In the case of any foreclosure on any federally-related mortgage loan (as that term is defined in section
3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) or on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subparagraph (C) shall not shall not affect any State or local law that provides longer time periods or other additional
protections for tenants.'.
SEC. 704. SUNSET.
This title, and any amendments made by this title are repealed, and the requirements under this title shall terminate, on December 31, 2014.
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