Need to You Keep Paying Rent if Your Landlord is in Foreclosure?

By MyVine | October 24, 2011

Finding out that you are renting a home which is facing foreclosure can be deeply worrisome. And also the worst part is that you will find a lot of questions that you could by no means obtain a response to from your landlord and have to begin researching on your own.

How far along is the process? Has the residence already been sold at sheriff sale? Who is the current owner of the property? Which bank may be the foreclosing lender? Can you get additional time to move out? Or has the landlord been working on a solution?

But essentially the most common question that tenants appear to have when they discover their apartment or rental house is in foreclosure is if they still need to pay rent or not. Needless to say, this is really a severe question, but it is a lot more important to know who really should be paid, as opposed to if a payment need to me made at all.

The short answer is that you are nonetheless needed to pay rent given that you might be still living inside the property and making use of the space you are leasing from the present owners. You’ve a contractual obligation to pay rent in exchange for the living space, and foreclosure doesn’t alter that until ownership is transferred by means of a public property auction.

In case you are concerned concerning the foreclosure, then you may have two alternatives, both of which you need to work on. 1st you’ll be able to either move out as soon as possible to prevent potentially becoming evicted later on, or, second, it is best to speak towards the landlord about what he is doing about the scenario and any possible solutions to foreclosure.

Some landlords are able to stop the foreclosure method before the residence is auctioned off, and then you would just be behind on rent should you stopped paying now and they saved the home. You’d possibly end up losing your deposit in that case, given that nonpayment is one reason you had to put down the deposit within the first place, and you might open your self up to lawsuits for back rent payments.

It is possible to also move out of the house claiming constructive eviction, which indicates the conditions made it so unlivable that there was no other choice than to break the lease and leave. If the owner does not provide you with your deposit back, it is possible to try to sue for it later on. You would just have to convince the tiny claims court that a pending foreclosure was a reason to move out prematurely.

A final aspect of the procedure to be aware of is following the sheriff sale, the bank could turn out to be the owner of the property and rent payments will should be created either to a trustee or the lender’s attorneys. Most usually, banks will attempt to evict any person nonetheless living inside the residence immediately after the auction, but if there’s a chance to continue renting, it could be best to think about the circumstances.

But you don’t just desire to stop paying rent unless you’ve the correct info concerning the foreclosure proceedings, what the owner is doing about it, or a game plan for moving out and claiming constructive eviction. Otherwise, refusing to pay rent because of a pending foreclosure may well have negative unintended consequences, based on how the rest of the legal process plays out.

Topics: Buying Tips, Financing, Foreclosures, General, Investing, Selling Tips | Comments Off

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