Short Sale of pre-leased property

[MorgansDaddy]

We are trying to find out what are our rights being that the property we have renting has been put into short sale. We realize it is likely that our landlord has not been paying the payment for the house, and it appears he has been using the money something else. Since he defaulted on the loan by not using the money we pay him for rent, does he have the right to collect rent? Also, being that it is in short sale and it looks like eventually we will have to move, do we have the right to move out before it sells and we get the 90-day eviction? Or, are we stuck here until it sells or it is foreclosed on if it can't be sold, and an eviction is filed. We really don't want to be evicted even if it isn't our fault, and also would rather put our rent money towards another place instead of giving him the money to waste, thus we'd like to move as soon as we find a new place but don't know that we can do that. Thanks for any help in the matter.

 

[jharris352]

I am not trying to be combative but what the landlord does not change your duty to pay rent. You are a bit too worried about being evicted. No one is going to evict you if you are willing to move. You are making some assumptions that the landlord is "wasting" the rent money. So let me deal with this in two pieces:

1) If he short sales the property the purchaser is bound to the rental agreement and can not evict you just because they bought the property. They may have a way in the lease to break it, giving you 30-60 days notice after the sale but they can not simply evict you. Read your lease. I would continue to rent where you are if you do not want to exercise any provision in your lease to break it.

2) If he allows the property to go into foreclosure then your lease is terminated with the foreclosure and the new owner can evict you. However, there are now federal protections that allow you 90 days to move. Any new owner is going to want to have you move by agreement and not by eviction. If they try to evict you they assume you will damage the property on your way out. Many times they will negotiate a "cash for keys" deal. They will ask you how much money you need to leave and how soon you can comfortably leave. You will not owe rent once the property has been foreclosed upon.

I don't know what decision you want to make but you can calm down. You aren't going to be thrown out anytime soon and you do have options. Does that help? Any questions?

Gail will eventually answer here but I thought I would give you the information she gave someone else. It's a good read about your rights.

Your rights

 

[MorgansDaddy]

I appreciate your response, very helpful. I guess its just natural to assume that with the fact that he has the rent money on time every month, then he shouldn't be in a short sale or risk of foreclosure if he is paying the mortgage out of the money we pay him. And if that is the case, which I'm confused how he is at risk of losing the property if it isn't, I would prefer not to keep paying money to him, especially if he is using for his own interest.

 

[Gail_in_Georgia]

Like many other homeowners in the same boat, a landlord may have gotten caught up with a mortgage that has suddenly ballooned in the amount of payments owed. If you have a signed lease, they cannot raise your monthly rent to reflect this extra cost. Your landlord may also have (again, like many in this current economy) lost their job, had their hours or wages cut, seen an increase in the amount of taxes and insurance on the house, etc..

Frankly, from a legal standpoint, it is none of your business what the landlord does with the rent. You cannot simply stop paying rent because you don't agree with how they use the rent money. You are concerned about being evicted; the fastest way to undergo this distressing event IS to stop paying rent. At this point in time the house is only being placed on the market to be sold, short sale or not. There is no guarantee it will be sold (and frankly, if you are interested in purchasing this place this would be an excellent time for you to consider this option).

Gail

 

[MorgansDaddy]

Isn't it "rent skimming" though for him to be collecting rent under the giving circumstances?

 

[Gail_in_Georgia]

No.

Gail

 

[MorgansDaddy]

Thanks to everyone who gave advice. I ended up asking him to just simply let us out of the lease. We were met with resistance at first. However after his listing agent informed him that us moving was the easiest way to sell the property quicker, he has agreed to our request. Thanks again!

 

[Gail_in_Georgia]

The listing agent did make an excellent point and it is good that it worked out well for you. Showing a house when a tenant still resides there is often quite a hassle, both for the tenant and the seller.

Gail