Do Renters have to continue to pay rent?

J Morrison - no question there is a lot of misinterpretation and over-simplification - your post included. Do remember that part of being a "bona-fide" lease, as clearly specified in the law, includes that it is for a fair market rental amount. Also, the new owner is not "required" to give you a notice at all - they could let you sit there, they can make you cash-4-keys offers, etc. all without any notice. Only if they decide to evict you must they provide 90 days notice. Sean Wed Apr 4th 2012 at 7:44pm

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. Michelle Wed Mar 2nd 2011 at 10:46am

Absolutely! Sean Sun Jan 8th 2012 at 10:33am

what if the rent that they are refusing to pay is rent for the current month they have already paid the previous owner for. Red Mon Apr 8th 2013 at 8:39pm

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. Michelle Wed Mar 2nd 2011 at 3:22pm

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? sylvia Thu Mar 24th 2011 at 3:52pm

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. Sean Thu Mar 24th 2011 at 5:06pm

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. Sean Fri Jun 19th 2009 at 11:03pm

do renters still have to pay rent after forclosers notice of sale, or short sale is taking place Anonymous Wed Aug 12th 2009 at 1:19pm

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. Sean Thu Aug 13th 2009 at 7:39pm

What if u don't have a lease. I've been staying in this four-plex for abou t 9yrs. The owner didn't tel us that she was selling and then tells us after the perspective buyer comes and takes pics tha the property is in escrow and we can continue to pay her rent for about the next 2-3 months. I don't think she has been paying her mortgage. What is a tenant to do. I physically and mentally work to hard as a mail lady to just be givng my hard earned $$ to someone that's not doing their part. toya Fri Aug 3rd 2012 at 6:43pm

If you don't have a lease, then in most states, you automatically become a month-to-month tenant, and you typically can be evicted with 30 days notice (faster in some states) - regardless of who owns the property (unless the property is foreclosed on in which case you get additional time under federal law that you wouldn't otherwise be entitled to). The owners "part" is to allow you to live in the property for the period of your lease (or 30 days in the case of a month-to-month agreement), they have no legal obligation to you with regard to how they finance the property, or to whom they sell it to. Sean Fri Aug 3rd 2012 at 7:48pm

Hi Toya, If you do not have a lease then you would be considered a month to month tenant. Michelle Tue Aug 7th 2012 at 11:57am

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. Michelle Thu Nov 11th 2010 at 2:39pm

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. Michelle Tue Nov 1st 2011 at 12:08pm

That's my question, the bank owns the home and its listed for bid sale in 8 days. Can't I live out my deposit forthis month until I meet the new owners and see if they will honor my lease or give me the 90 days. Answers please. yari Wed May 1st 2013 at 5:16pm

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. Sean Thu Mar 24th 2011 at 6:54pm

Even without a lease they have to give you 90 days notice if you can show that you are a tenant. Proof of past rent payments should be more than sufficient. Sean Mon Apr 30th 2012 at 10:03pm

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. Michelle Thu Jun 24th 2010 at 12:06pm

Maria - I have one even better. I have been friends with these people for over five years. They move out of state and I have been helping them with upkeep on their property as well as assisting them as property manager with their tenant's from time to time. I here from them that the tenant has decided to move out all of the sudden and I need to go change the locks for them... "no problem" I say. I then ask them what they plan on doing with the house? They tell me they want to rent it out again. I tell them that I might be interested in moving in to help them out so that they don't have to advertise and wait on finding a tenant. A few days go by and they decide to tell me that they are "thinking" about starting the short sale process. I tell them I appreciate them being up front with me, but I'm not interested... thanks anyway. About a week goes by and they call me back with an offer. They say... move in and pay our 1st mortgage during this process and they'll keep me informed as too what's going on. I did some research and found out that this could be a very lengthly process. I tell them that I'm not interested in doing this if I'm only in the house for less than six months. I'm gonna be really pissed off if I have to move again. We decide to move in without a written lease agreement. Things are great. Two weeks later we get a rep from the bank that wants to take pics and evaluate the house. He says that home will be listed in about two more weeks. I call my buddy and ask him... "what the heck is going on?" He tells me everything is OK and not to worry. I believe him... we've been really close friends for about 5 years or so. I ask him if he's paying the mortgage. He tells me yes. The house is listed and an offer is placed and accepted within the next three weeks. We have barely been in the house for a month now and the house is almost sold. I call my buddy back and we have a argument. I tell him I want to see proof that he's paying his mortgage before I send him anymore money. He tells me no and that I need to either pay or vacate. I tell him to go to hell. The house is scheduled to close on a Friday... he get's notice from the bank that the closing date is going to be postponed another month. He issues me a 5 day notice. I ignore the notice... thinking, if he wants me out he's gonna have to force me out. It's gonna take him at least 2 months to do that. The Saturday before the scheduled closing date the offer on the house is pulled. My buddy issues me a summons to appear in civil court that Monday before the scheduled closing date. I'm thinking "what's he got to gain from all of this?" He just wants to be a dick and push me out. I go to court that Friday... lose my case and now have a judgement against me. Lesson learned... "always get things in writing NO MATTER WHAT or WHO" Jordan Tue Sep 25th 2012 at 11:47am

HI Jordan, I always tell people that the landlord can evict for non-payment regardless of the status of the mortgage payments. We know that most landlords losing their house to foreclosure will not go through the hassle of evicting someone if they are in foreclosure. Many tenants gamble on this fact and stop paying rent and in MOST cases it works. Sounds like you crossed paths with someone that did not mind going through the process. Thanks for sharing your story. It confirms that the landlord can successfully evict a tenant for non-payment regardless of the of the foreclosure status. Michelle Tue Sep 25th 2012 at 3:49pm

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. Sean Fri Jan 27th 2012 at 11:29am

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-civil-code-890. 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 Fri Jan 27th 2012 at 12:27pm

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. Sean Sun Jan 29th 2012 at 9:19am

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. Michelle Tue Sep 20th 2011 at 10:11am

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. tony rich Fri Sep 16th 2011 at 1:52am

Hi Tommy, The property is "in foreclosure" but has not gone to trustee sale. The lender has no right to sell the property unless the property has gone to trustee sale and becomes bank owned. The owner (your landlord) continues to own the property until the trustee sale which is why you would need to purchase from the owner. Once the property goes to trustee sale and becomes bank owned then you can purchase from the bank. You do have the option to bid on the property at trustee sale but you would need to pay all cash and you would not get title insurance. Check out our video on what happens at a trustee sale http://www.foreclosuretruth.com/blog/sean/video-foreclosure-auction-guide/  Your best bet is to try to purchase directly from your landlord. Chances are it would be a short sale but this would insure that you are not bidding against other investors. Michelle Wed Jul 18th 2012 at 2:04pm

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 Thu Feb 9th 2012 at 12:48pm

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? Richard Fri Feb 10th 2012 at 9:12am

You talk about obligation, but the landlord had an obligation as well. People are afraid and don't know what to expect when the sheriff comes knocking on your door out of the blue with foreclosure papers. It is unfair to the tenant and the laws are still not thorough enough in my opinion. Everyone's situation is different. I certainly thought about whether or not I had to still pay rent. It’s so wrong to put people in such stressful, awkward situations, especially if the landlord was aware of what was transpiring in the first place! *Slum lords Forced to move Thu Mar 7th 2013 at 11:14am

what are you talking about,John, In refrence to the previous post, What do you think the owner of the property has been doing to this lady, taking her rent, with it being in forclosure! THAT IS STEALING!!!! Nottingham Tue Mar 12th 2013 at 11:59am

Lol. Why would u consult with a realtor? Anyone can be a realtor. Are u kidding??! yaritza Sun Apr 28th 2013 at 8:52am

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. Michelle Fri Aug 6th 2010 at 12:53pm

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? Rexwoman Sun Aug 8th 2010 at 3:32pm

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. Michelle Mon Aug 9th 2010 at 9:58am

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. Sean Sun Jan 8th 2012 at 10:33am

+/- 30% seems ludicrous - in both directions. Can you point to a court ruling that backs the figure up? If not, then at best it's a wild guess. If so, it is likely just one courts opinion, unless it was issued by a high court. You are oversimplifying again, but its pointless to keep talking in circles, I think folks get the point. Sean Thu Apr 5th 2012 at 2:45pm

The NOD is followed by a Notice of Trustee Sale (NTS). The NTS is a minimum of 90 days after the NOD. Sale can be scheduled no sooner than 21 days after the NTS. And, most are postponed for months. And yes, when you lease expires you will be a month to month tenant and will get at lease 90 days notice to quit. So, as you can see, you have at least 6 months from the date of the NOD. If you like living there, stay. Keep an eye on the process and learn about your tenant rights so you can take care of yourself. Richard Thu Apr 12th 2012 at 9:44pm

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. Gregory Fri Jan 15th 2010 at 2:10pm

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. Gregory Fri Jan 15th 2010 at 2:13pm

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-and-renters-take-note-significant-change-eviction-notice-req/ You seem to need to vent some anger... please find another site for that. Sean Sun Jan 17th 2010 at 5:13pm

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 Sun Jan 17th 2010 at 5:21pm

if the home i rent is listed under forclosed active. whats that mean should i pay the manager rent necie Wed Jun 6th 2012 at 2:08am

If the new owner gives you 90 days to vacate do you still have to pay rent or do you take that time to save for a new place to live? nicole Thu Jul 19th 2012 at 12:03pm

Hi Nicole, The PTFA is poorly written when it comes to the payment of rent during the 90 days. They cannot evict you for non payment of rent during the 90 days but they could seek a judgement for the past due rent at the end of the 90 days if they are forced to evict you. Oftentimes it is better to negotiate a cash for keys agreement or work out some other agreement to vacate the home by a certain date. Michelle Thu Jul 19th 2012 at 12:17pm

They are entitled to rent from the first day they own the property, and there is no legal requirement for them to offer cash-4-keys. You do not have to pay them anything during the eviction process, but the judge will award them a judgement against you for fair-market rent for the period of their ownership. Such a judgment will likely appear on your credit report. I remain unclear on this, but if you refuse to pay rent, the law may allow them to give you a 3 day notice instead - the theory being that they are now evicting you for failure to pay rent rather than terminating your residency due to the foreclosure. Since you mentioned 90 days I assume you were a tenant rather than the prior owner. If so, the prior owner does owe you your deposit back, and if they refuse to give it to you you can take them to small claims court and not only with the deposit back, but likely damages as well. You should do this regardless of what you do with the new owner. Sean Wed Apr 4th 2012 at 6:57pm