Do Renters have to continue to pay rent?
Submitted by kellywood851
from AZ
- 04/21/2009 - 9:02pm
Once the trustees notice for sale is posted on the rental unit are the renters still obligated to pay their rent?
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YES. Nothing about foreclosure changes the obligations you agreed to when you rented the home, unless your rental agreement has a clause specific to foreclosure. Really doesn't matter if they make the payment or not.
Once the home is foreclosed on, your lease or rental agreement is "wiped out". So the buyer (or bank) that ends up with the property is not bound by that agreement... though even then you still must pay rent (typically fair market rent).
Sean is an idiot. All leases survive a foreclosure and the new investor must honor your lease and yes, you have to pay him rent as indicated by your lease. If you are a month to month tenant, the new owner must give you 90 days to vacate.
And besides my message below, know you are wrong here as well. Not "all leases survive"... only residential, arm-length leases at fair market value. Plus you don't have to give them "90 days to vacate", you have to give 90 days notice before proceeding with eviction - which then varies quite a bit by state.
Sean....have some sort of idea of what you are talking about before answering a question. Once a home is foreclosed upon your lease agreement is "wiped out"? Are you serious. This is not true. Again, think before you speak primarily to avoid giving reckless advice, but even to avoid looking like a complete moron. Too late on the latter......idiot.
Actually I was dead right until the law was changed on 5/20/09 when Obama signed the Helping Families Save Their Homes Act of 2009, which we reported on 5/25/09 here: http://www.foreclosuretruth.com/blog/sean/auction-investors-reo-brokers-...
You seem to need to vent some anger... please find another site for that.
Sean - does the new owner who bought the home at trustee sale in CA have to create some sort of MTM rental agreement for the tenant? If it's not required, do you suggest creaiting one? I assume it'd be a 90 day agreement if so, since you have to give them 90 days to move out now, correct?
Probably a better question for an eviction attorney, but the only agreement I ever try to get occupants to sign is an agreement to move out by a particular date and leave the place clean, ideally together with a stipulated judgement in the event that they don't.
I NEED LEGAL ANSWERS! ! ! please !
I am leasing a townhouse, which the realtor said was not on FC. After one month of moving on 12/31/09 at 6:39PM i was served docs form the bank's lawer stating the house had not been paid for in 3 months. After that things moved quickly and the house in on a short-sale. They have a buyer, and the bank has sent a couple of reps to take pics and do inspections.
I'm obligated to continue to pay the owner (landlord). As per lawyers and individuals i have spoken to they said no. But i continue to read on the net that regardless of FC or Shortsale, i have to continue paying the lease till the sale is completed.
i dont know what to do anymore. I have not paid in 4 months since everyone even a lawyer i spoke with suggested so.
Your feedback is so greatly apprciated.
Zalishida Confused :(
do renters still have to pay rent after forclosers notice of sale, or short sale is taking place
Yes - unless your rental agreement specifically addresses the issue, there is nothing in the law that forgives you of your contractual obligations just becasue the landlord isn't making their payment. You do, however, have the right to quiet enjoyment so they can't just show the house whenever they want if they are doing a short sale.
My fiance and I came home today to find paperwork advising us, the home we began renting on 06/15 is now in foreclosure.(Hollywood Fl.) This home will be auctioned off on 07/28. Great... we asked the landlord in the beginning if the home was in foreclosure but never checked even after flyers,advertisements and solicitations from foreclosure/ bankrupcy attorney's kept coming. Rent was due today but after receiving this paperwork got angry and did not pay it today!
My fiance and I came home today to find paperwork advising us, the home we began renting on 06/15 is now in foreclosure.(Hollywood Fl.) This home will be auctioned off on 07/28. Great... we asked the landlord in the beginning if the home was in foreclosure but never checked even after flyers,advertisements and solicitations from foreclosure/ bankrupcy attorney's kept coming. Rent was due today but after receiving this paperwork got angry and did not pay it today!
I'm so angry taht we were lied to! Especially since we asked and were assured "No this home isa not in foreclosure, we had some money issues before but that's what attorneys are for, it's taken care of !" Would I be evil if I called them to come get the rent, have them drive across town and leave before they get here??
I am not familiar with the laws in Florida but we appreciate you posting this to help prevent other renters from "trusting" landlords. It is so important to make sure you know the foreclosure status of a property. Most realtors can easily look up this information for you.
It would probably be very helpful, even now, to consult with a good realtor in your area that has experience with foreclosures. On the west coast we are seeing numerous postponements and cancellations of sales so even though you received a notice there could be additional delays.
I am currently living in a condo that is up for "short sale." My contract ended 2 months ago and I am continuing to pay $1300/mo to the landlord. I also have not received my security deposit back yet. Should I stop paying??? What should I do??
In most leases once the term has expired your tenancy continues on a month to month basis. You would be required to pay rent on a monthly basis until you move by giving a 30 day notice (typical in most leases but check yours). Your security deposit would not be due to you until after you have vacated and left the property in good condition.
The fact that the property is listed (there is no difference between listing it as a short sale or a regular listing) has put you on notice that you may have to move. The owner would have to give you the same 30 day notice.
Shorts sales continue to take an extended period of time to be approved so you should keep in touch with the listing agent to check he status of the sale.
I have a friend who is in the same situation where the unit is up for short sale. The building manager/Realtor, who is collecting the rent for the owner told my friend that the unit she lives in has been sold in a short sale. This is not true. The unit is still in active listings. The building manager has lied about the unit being sold in the past and is being untruthful now. The owner was foreclosed on and has not paid a payment since March of 2009. My friend's lease has expired. The building manager is wanting to have my friend sign a new lease with the "new owner". Is there a way to find out if the building manager is pocketing the rent money? My friend was told by an attorney friend not to pay the rent. Is she bound to pay?
Ask to see a copy of the Grant Deed conveying title to the new owner. You can also contact your local title company and ask for their customer service department. They can give you a profile and a copy of the current vesting deed to that you can see who owns the property. They will also be able to provide you with copies of any foreclosure notices that have been filed on your property. You can also call a local Realtor with experience in foreclosures to help you research this information. Once you determine who the legal owner is then you will be able to make an informed decision on your future tenancy in that unit.
i reside in a home, in which i just received papers from a law office stating a court date and motion for possession and foreclosure of the house. i been paying rent since aug. when i signed my lease, do i continue to pay the landlord money for the house, and when should i expect to move? my lease was dated until aug. 2011.
Hi Stacy,
The laws in each state are different and you have not indicated your location. You can reach out to a FREE housing counsellor in your area by going to makinghomeaffordable.gov. They should be able to help you or at least refer you to someone who can.
In CA if the lease is dated prior to the Notice of Default then the new owner after the property goes to trustee sale(bank or investor) will have to honor the terms of your lease. If the tenancy is month to month then you would be given 90 days notice to move.
Although the rent is legally due when you are still living in the home regardless of the foreclosure status (or whether or not the mortgage payments are current) many renters stop paying rent since it is unlikely that the landlord will evict them for non-payment if they are losing the house in a foreclosure.
It is so important to make sure you know the foreclosure status of a property. Most realtors can easily look up this information for you.
It would probably be very helpful, even now, to consult with a good realtor in your area that has experience with foreclosures.
I have served a tenant with a notice to quit and provide proof of lease. we ask for the proof of lease so we know how much they should continue to pay if they decide to use there legal 90days. i have not been given proof nor have i received there 1st rent payment. Can I now give them a 3 day notice to pay rent or quit? I have seen other investors do this to speed up the eviction process in tenant occupied homes. Is this legal?
Hi Carlos,
The statute is silent regarding the payment of rent for the 90 day period which makes this very confusing for investors. You are required to give a tenant in CA 90 days notice following a trustee sale. It is my understanding that you cannot evict them during that time for non-payment of rent. That is not to say that you cannot potentially seek a judgement at the end of the 90 days for past due rent or include that amount if you are forced to evict them after the 90 days. This is precisely why so many investors choose to offer a cash for keys incentive and negotiate an agreement for the tenant to move out by a certain date.
what can i do if my lanlord lied to me?and how can i find out how long its been since he made a payment? one month after i moved in he said he was going to let the house go.when i moved in i asked if house was for sale or going to be forclosed on andhe sid no
Hi Sylvia,
You would want to have someone review your case to determine if you landlord broke any laws when he rented you the property. You can certainly look up in public records or consult with a local real estate professional that can look up the address to determine the current foreclosure status of the property. You can find a free HUD approved counsellor by going to makinghomeaffordable.gov. They should be able to assist you with local landlord/tenant law on this matter.
so what happens on the day my house went up for sale? how do i find out if it was sold or not?what about my deposit do i get that back?if the house didnt sell does the bank take over or is it still my land lords?
If you have a copy of the notice of trustee sale you can call the number on the notice to get the status, or you can use a service like ours to look up the status.
You should contact the current landlord about getting your deposit back, it is their responsibility.
If the house didn't sell then the landlord would still be in control.
Back in February our landlord said they are letting the house go into foreclosure (through a letter). In the letter it stated that March would be our last month of payment and that we could stay in the home until it foreclosed. Then in the beginning of March they called and decided to short sale the home. We resigned a year lease with them back in November 2010. (mind you, we did not know they were not making mortgage payments since March 2010). They have recently sent us a 45 day notice. I know they can't kick us out because of our year lease. But, should we continue paying the rent to them?
Your call, but know that if you don't continue paying the rent then you will be in default on your lease, and they will be able to evict you.
Live in CA, tenant for 4 months on a 6 month lease. Just found out via mail that house up for bids on June 28th. Owner never told me this was going to happen. Needless to say, I'm *^!! off and stressed. Legal for them to be collecting rent since Feb?. Lease up August 8th, is it legal for them to "renew" my lease so I can stay longer? remembering house pu for bids this month on 28th. Owner said will do a month to month after lease ends. If it is sold before lease up, still have 90 days to move out? If sold after lease is up, still get 90 days? and still pay rent to owner???? or not. What the heck? Please and thanks for answering "each" question.
if it sold beofre lease up, you have the time until lease up. example, you are now in september, your lease up is feb, you have 5 months, and if it sold now, you have 5 months to leave, if it sold in december or january, you have up to march and april., you do not have to pay to prior owner, and might not have to pay to new owner if you do not want to. because they will evict you in 90days anyway. why would u pay for when u will get evict.
I rented a condo from a real estate agency 3 months ago, i just got a letter stating that the place is under forclosure and a bank owns the property now. I have a lease until april here, the agency says i still have to pay rent until my lease is up but i am wondering if there is a way that i dont have to pay rent and can get out of my lease since the bank owns it now. Please and Thank you
Hi Amber,
If the bank now owns the property it is highly unlikely that they have hired this group to continue to manage the property. Under the Protecting Tenants in Foreclosure Act the bank must honor the terms of your lease provided it was signed prior to the Notice of Default. It sounds like they may have rented this property to you after it was already in foreclosure. The bank/banks representative will make contact with you. They must give you 90 days notice. Oftentimes the bank will negotiate a cash for keys agreement where they give you a certain amount of money to be out by a certain date. This helps you with moving expenses and insure that you are not going to be thrashing the place when you leave.
I am not sure I would continue to pay anything to that agency until they can prove that they have been hired by the bank.
I live in a short sale house, the owner stop paying the bank and rented it to me with a 1 year lease. the contract is over now, do I have to keep paying rent even thought the bank is the owner. please advise. Thanks
Hi Salad,
Your question is a little confusing. Is the property listed as a short sale or did it go to trustee sale and is now bank owned?
Once your lease is up it usually converts into a month to month agreement. If the bank does in fact now own the property they will be in contact with you and you should not continue to pay the prior owner.
We lease a home in CA and have 8 months left on our lease. The home was sold at auction to an investment company, mid-month. We'd already paid the full month's rent to the prior owners, per our lease terms. I understood that the new owners could not collect rent since we'd already paid the (now former) landlord for the month in which the Trustee Sale occurred. In other words, we paid the November rent on the first, and the Trustee Sale was on the seventh, so the new owner can't collect November rent again since we have met our obligation under the rental contract. The new owner says we're wrong and that we owe him the rent pro-rated from date of sale to the end of the month. Who's right??
Repairs have not be done in months to a broken window, even though we've requested several times. It's winter time now and cold air even with plastic comes in. What are our rights? Lastly, building in foreclosure and bank purchased it two months ago. Do we still pay rent and to whom?
Cynthia - Yes, technically you would still owe rent, the bank that now owns the property should contact you... I'd just stay put until they do. Note that the bank will likely offer you cash to move and leave the place clean - and when they do that they typically don't ask for any rent (but it would be smart to set the money aside just in case).
As for the repair, given the lack of response I'd think you'd be well within your rights to pay for the repair and then either ask for reimbursement or deduct it from the rent.
If after forclosure, and the tenant
refuses to pay rent to the new owner, can i now start and eviction processes based on NON-Payment?
Absolutely!
ATTENTION: FYI - The "Notice of foreclosure" [date] per the PTFA of 2009, as amended is exactly the date on which the TITLE transfers and not a moment before. So if you leased a home even 2 weeks before the end of the foreclosure process, your lease is fully protected under the PTFA 2009:
The financial reform bill passed by Congress will extend the Protecting Tenants at Foreclosure Act (PTFA) through the end of 2014.
PTFA, originally enacted in May 2009, allows renters whose landlords have lost their properties to foreclosure the right to stay in the home for 90 days after the foreclosure or through the term of their lease. Without the new extension in the financial reform bill, the law would have expired at the end of 2012.
The new law also clarifies the date of a notice of foreclosure as the date of a completed title transfer: “The date of a notice of foreclosure shall be deemed to be the date on which complete title to a property is transferred to a successor entity or person as a result of an order of a court or pursuant to provisions in a mortgage, deed of trust, or security deed.’’
RE: DO NOT PAY RENT -- On the matter of paying rent to a slimeball LIAR owner who scammed you and failed to tell you the house he/she leased to you is in default or foreclosure. This happens every day. The owner of the house I lease did this. I found out he was in default, and DID NOT PAY A DIME in rent from thereon.
What I did do, is send this lying piece of trash a notice that HE was in default of the lease for failing to make a mortgage payment, which is a fundamental component of EVERY lease.
Obviously the owner has a duty in every state to >> provide << the property that a Lessee is supposed to enjoy. By failing to pay the mortgage, the owner did three things to harm me and incurred actionable liability in doing so: 1. Defrauded me by taking rent and not paying the mortgage and, 2. Deprived me of my Right of Quiet Enjoyment, 3. Jeopardized the my right to enjoy and access the property for the entire lease term.
I stated that I was now placed into a position of severe emotional distress, as my residential STABILITY is now in question, due to his deception, fraud and negligence.
Well, all of a sudden, this liar never asked me for another rent payment, as I had a HUGE counterclaim v. him.
A neighbor on another street had the same scam perpetrated against him, and used my method to NOT pay another cent of rent to the liar owner.
While MOTS suggestion will likely work in practice, I think he is wrong that paying the underlying mortgage is a component of any lease.
I personally think the idea that landlord "defrauded" the tenant by taking the rent and not paying the mortgage is ludicrous. The landlord still owns the house, he's 100% entitled to rent under the law, and if the landlord has issues with his lender that's between them... at least until it ACTUALLY impacts the tenant...
With that in mind he may be right that you could have a case that the foreclosure interfered with your right of quiet enjoyment (assuming it has actually interfered (ie. people knocking on the door, taking pictures, etc).
As for jeopardizing your right to access the property for the entire lease term, I don't think that argument makes any sense for 2 reasons - first the possibility that you could lose access is not the same as actually losing access, and it would be hard to prove you suffered any actual damage until you actually lost access, and second, federal law currently allows you to stay in the lease until the end of term even if a foreclosure occurs, so there isn't really ANY possibility of being damaged, or "jeopardized" on this front.
thx for your opinion, as wholly incorrect as it is. Read the Law re: the provision of the property that is leased. Failing to make a mortgage payment is a material BREACH of lease. Further collecting rent while not making mortgage payment is a FELONY in some venues, "expert" sean.
MOTS - Please feel free to point to the specific laws, especially the one that would make a civil matter between a landlord and tenant a felony. Until then consider me completely unconvinced of your opinions.
By the way the term you are looking for is "Rent Skimming", the text of the California law on the subject can be found on our website here: http://www.foreclosureradar.com/ca-foreclosure-law/ca-foreclosure-law-ci....
Note specifically the definition of Rent Skimming:
"(1) "Rent skimming" means using revenue received from the rental of a parcel of residential real property at any time during the first year period after acquiring that property without first applying the revenue or an equivalent amount to the payments due on all mortgages and deeds of trust encumbering that property."
So if the person has owned the property for more than one year, simply not paying the mortgage does NOT qualify as rent skimming.
Further a tenant (ie you) only has a cause of action to the extent they were damaged (my point earlier):
"(d) A tenant of residential real property may bring an action against a person who has engaged in rent skimming with respect to that property for the recovery of actual damages, including any security, as defined in Section 1950.5, and moving expenses if the property is sold at a foreclosure sale and the tenant was required to move."
Finally, it is only CRIMINAL (though no mention of felony), if the landlord does it five times or more:
"(a) Any person who engages in multiple acts of rent skimming is subject to criminal prosecution. Each act of rent skimming comprising the multiple acts of rent skimming shall be separately alleged. A person found guilty of five acts shall be punished by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment."
Having looked at most standard forms of residential leases commonly used in CA I've seen none that make default on the mortgage a breach... though I do think that should be a standard clause, and I would personally require it if I were to lease a property. I even suggested the idea to the California Association of Realtors some time ago (haven't checked recently, they may have added it).
@ sean -- Using FALSE PRETENSES TO FRAUDULENTLY STEAL MONEY [in excess of $500 in most venues] is a FELONY known as GRAND THEFT. Criminal FRAUD is different from civil fraud, and is no less applicable in a "landlord/a/k/a ASSHOLE" Tenant deal. For a SCUMBAG owner to lie to a Victim Tenant and state that a house is not in default/foreclosure, then fraudulently collect funds in excess of $500, is a FELONY and is both civil a and criminal matter. Wake up dude!!!
MOTS, please stop, you are starting to make a fool of yourself.
Understand the landlord continues to own the home up and until the day the home is sold at foreclosure auction. During that time they have every right to rent it, and collect rent. They haven't stolen anything from you - you paid rent, you got to live there, and as such they lived up to their end of the lease COMPLETELY. Until they ACTUALLY violate the terms of the lease, ie impacted your right to quiet enjoyment, collecting rent AFTER it has actually been foreclosed on, etc. you have NO case.
"They haven't stolen anything from you - you paid rent, you got to live there." Sean, I respectfully disagree. When an owner fails to provide the contracted structure and deprives the Resident of their right to a peaceful, non-chaotic, RIGHT of QUIET ENJOYMENT, that owner DID STEAL from that Resident, and their entire family.
Being forced to have to endure the tremendous 2 month long SEVERE STRESS of: 1. finding a new home, 2. coughing up new deposits, 3. packing, 4. Incurring moving costs, 5. unpacking, etc etc etc etc etc, because of the failure of the owner the honor the lease contract and keep the note current, actually is >>> extremely harmful<< and is tantamount to stealing, not to mention amoral.
I would NEVER make payments to any owner who is in default and who harmed me like this. Further I would REQUIRE a simple one paragraph [enforceable] "FORECLOSURE CLAUSE" in any lease - which stipulates that if the owner ever fails to make a mortgage payment in any given month on the home/apartment etc. that I am leasing, they IN WRITING agree to waive the rent payment for that month as "LIQUIDATED DAMAGES."
If any owner would ever refuse to add and execute such a timely and protective clause to any lease; I would regard same as a clear indication that that owner is 1. already in default, or 2. headed for default and a lis pendens being filed soon. They can find another sucker to cheat with their house, which is very likely headed for foreclosure.
One typical way "property managers lie and deceive prospective Residents all over the USA is by [falsely] assuring them that "we checked the mortgage and it is current", or "the landlord is solid" etc x 100 other lies. (Hope that reads better, Sean, Best Jim)
I have puchased several foreclosures with tenants living there. And I have heard the stories 1st hand about the previous landlords. In many cases, we kept the property and retained the tenants. The tenants were relieved and we get an immediate return on our investment. As a landlord, I would never sign a lease with the types of conditions you are suggesting. Where we live, we have a lot of competition for our rentals so we would pass on a tenant wanting this. I also have met many tenants in foreclosure of properties we don't buy. And I have helped them to understand what is happening and what their rights are in general. Bona fide tenants in foreclosure have more rights than the owners living in the house have.
You seem like a smart guy with the ability to do your own research. I would suggest that you do your own research a the county recorder on any property you are thinking about renting. Look a the history of the owner and the property. Use Zillow or other sites to check values and it is or has been listed for sale. If you discover the property is worth $200K and there is a $400K mortgage, you may want to look for another rental. If you see it is in default or has been in default, don't rent it. The truth is that there are more good landlords that have managed their properties and they are not under water.
If you are fed up with the whole thing and tired of the uncertainty and control of renting, then now is a great time to become a homeowner. I would assume from your demands that you have an 700+ FICO, a great job and money in the bank. These are the things we look for in our tenants.
@richard - the ONLY reason someone like you, i.e an owner would refuse to sign the aforementioned "FORECLOSURE CLAUSE, is simply because you are in DEFAULT, and the thus the exact type of owner any Resident should clearly avoid. BTW - who says I do not own property?
New flash: Bona Fide Tenants all over this despicably corrupt and soon-to-be-revolted country, must FIGHT to protect their PTFA rights. Try READING the FACTS dude -- what are you smoking???
"I would assume from your demands that you have an 700+ FICO, a great job and money in the bank. These are the things we look for in our tenants."
Oh yeah - just go do a forensic financial investigation on every prospective rental - what an IDIOTIC idea. In case you do not know: the "county recorder" doe NOT record if a property owner is 90 days in default, wizard.
I would assume form your [quoted] sarcastic smart ass comment that you are the type of con artist/liar every Resident must avoid.
I also feel very sorry for an Resident who has to deal with you dude.
So; we both can assume, huh???
We are not a sub-prime landlord. So, I can see if you are a sub-prime tenant, the only option you have is to play the victim. We have great relationships with our tenants and we provide quality housing at competitive rents. Our are long term tenants. BTW, if what you want is to know if the landlord misses a payment, how are you going to find that out? Privacy laws prevent the banks from talking to anyone other than the borrower. So, unless the situation becomes severe enough to result in the recording of a notice of defualt, how are you going to know?
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