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Your rental is foreclosed on, what happens to the renter?

house for rent The Modesto Bee put an article out there that I have been wondering about lately. They talk about what happens to the renter when the house is foreclosed & their landlord didn't tell them they were losing the house to foreclosure. Here are the options in summary;

* renter moves out with no problems once the bank tells them they own it now.

* renter does not move out right away after the bank tells them to get out but offer the "renter" cash for keys for them to leave.

* Note the "rental skimming law" in California. If the landlord (in their first year of ownership) has their house foreclosed on, the renter can try to get their actual damages back (meaning moving expenses, security deposits & possibly attorney fees too). The catch is that the landlord has to have collected rent in that first year.

My suggestion is be careful out there when you are trying to get into a rental with your choices you make. Do your due diligence in checking out your future landlord as they are checking on you too.

Posted by Christina ONeal ~ Ripon, California realtor on 12/19/2007 01:24 AM

Comments (20)

foreclosure, renter losing home, cash for keys, rental skimming law

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20 Comments on Your rental is foreclosed on, what happens to the renter?

DEC

2007

Good advice. Always remember if the deal seems to be too good .. it probably is. I know some people do not intend to stiff their renters - they hope that they can move out, stay with friends and family and pay the difference between what they get for rent and what the payment it. Unfortunately that does not always work.

Landlords check out renters ... and renters should check out their landlord!

Hi Donna,

Thank you for that point. You are right, I am sure some people did not do it intentionally.

DEC

2007

The last two REOs my partner and I got the sellers never even told the tenants and collected the rent for December even tho the house was foreclosed on. Talk about a bummer. We are taking care of the tenants the best we can so they can move out with some dignity after Christmas.

DEC

2007

For years America has been passive recipients of a credit score when determining the suitability of an application for rent. We now have the first ever National Tenancy Database which is a bureau that stores and exchanges tenants specific information for effective tenant screening. We are taking control of tenant screening and becoming active participants now because for a long time we have been behind the rest of the world. It is not just for apartment history stored on the database,it is for every type rent situation in the country and the information is gathered directly form the managers and landlords. We expect it will become the number one screening tool in the country by the end of the decade. The tenants information is added create a Tenant Score^TM. The tenant score is averaged by the number of listings (leases) however the inquirer can see exactly how that tenant lived in their home, if they paid on time, if they broke lease early etc. Every tenant knows they are on the database and signs a disclosure. The member can upload relevant support information to to the listing as a record keeping tool. This is a responsible and reliable service for housing investors and or property managers across the USA. We invite you to look at our service http://www.allabouttenants.com/
CEO
American National Tenancy Database LLC (ANTD)

DEC

2007

Gee! Everywhere I saw the words "be careful out there." Thank you for your kind advice.

But, do we have to live in our home country and to be remind of "be careful" and "check out" as our young "innocent" soldiers put out in the jungle street of Iraq?

Who have created a world like that Middle East War Zone for us to live in?

Why we have to live in a modern society so complicated and "well-managed" like that?

Can we just be left alone and live in a carefree home?

So advanced our society is now on the Earth. It won't be workable without a lawyer. So we have 1000 times legal professionals than Japan. Seems we need more agencies, regulations and more lawyers. We don't have enough all of them! Someday in the future, everyone is an attorney or at least like New York City most of people are working a legal-related job.

Wish we could have a more simple life to live in American society as free as we are at home. Forgive me, I am just dreaming as Dr. King.

Good law in California - but it sounds like the renters would be standing in line for their money. Can't get blood out of a turnip.

Hi! James:

Yes, Good law with good intention. The only problem is just like you said "how to get blood of a turnip"? But that's not a concern of a politican who is only good at "lip" service.

DEC

2007

Christina -- renters are getting the blunt edge when a seller is allowing the bank to foreclose, and they have not informed thier tenant, but continue to collect rent.... it all boils down to integrity -- some have it some do not.

APR

2008

What's your advice to us--our landlord said she was trying to refinance, tried to sell us the house and eventually suggested that we pay an additional $500/mo in rent (23% increase).

Rates have gone up over 10% in our area if you base it on what is being advertised so if we move we'll pay more too. Should we downsize to a smaller house to keep within our ideal budget (means kids will have to share a room)? Should we wait a few months when we know for sure what the landlord's decision is? There has been no formal notice of the rental increase as of yet--just the suggestion. By the way, we offered to pay an additional $300/month since rents have gone up, but she came back and said she'd meet us "halfway" and do $400! Funny math she has there. And if she's nickling and diming us maybe she really is that desperate and will lose the house anyway.
I can't help but feel somewhat insulted after paying rent through direct deposit for over 2.5 years that she expects us to pay the higher end of market proposed prices--$500/mo extra in rent-- with no notice. Luckily in CA there is a law that requires a 60 day notice for increases over 10%. Likewise, if you've lived in a house for more than one year, they need to give you 60 days.

Just don't know if we should jump on the first thing we can afford or ride this one out until we really have to move (worst case 60 days from now).

Also...I get the feeling people who have unsuccessfully tried to sell are now putting their houses up for rent at the same rates as their mortgage (over 20% the rates of only 2 years ago) and expecting people to rent at these high prices. Others seem to see the high rents advertised so they put theirs up at a higher rate too. So many of the houses for rent are already vacant and ready to move into. I don't know if they're getting these higher rents or if they're negotiating down.

Once a foreclosure notice has been processed and the landord has constructive notice, I believe the landlord has an obligation to provide notice to the tenant of the notice of foreclosure. Perhaps the landlord could be held accountable if the tenant has not been notified in a timely manner and, in addition, the landlord would be assessed fines and penalties commensurate with relocation fees. I would like to see laws passed with a provision of this type benefiting a responsible tenant. It might also be considered that the period of constructive notice of eviction for the tenant should began at the commencement of the first foreclosure notice unless the right of statutory redemption has been exercised by the landlord.

JUL

2008

I seem to read a lot about what the Landlord can do as far as a bad tenant is concerned but I think that we should also be rating the Landlords themselves. There are a lot more bad landlords than there is good ones and when you have a good one you should really count your blessings. We are being told to move by our landlord who's home is in foreclosure and he wants us to move within his 3 week period. He has chossen to move before the foreclosure sale in September and he wants to take all of the appliances in my unit when he leaves. He was so upset last night, because I had not yet found a place, that he picked up and threw my scooter against my door and broke the gas tank and other areas on. He is out of control and I don't know what to do about it. Any words of wisdom. I haven't recieved any eviction notice or anything. He just says that I have to be out by July 17th. Thanks.

Your landlord does NOT have the right to do that sort of things. He or She has to follow all the legal landlord-tenant regulations in your state. You can go to the regulatory agency and file in a complaint against you landlord for the damage. Right at the time it took place for the landlord to threw your stuff, you might be able to call a police to arrest him or her for public nuisance or personal threat. But, it is too late now. Next time it happens again, just call 911 for your life may be in danger.

From legal perspectives, right at the instant the foreclosure is completed and title is deeded to a banker, your landlord lost everything in the real property. Before that point of time, it is ALL legal for the owner/ landlord to take anything built-in that piece of property. That's right he or she can legally destroy or do anything he/ she owns in the property (but you're a tenant, you have your right to use all the provided appliance in the unit as agreed. If he takes it away from your enjoyment, he breach the contract between you and him.) After that timetable, he or she may be liable for the damage he/ she makes. That's why your landlord wants to take possession of all the movable stuff out of the apartment.

As I know, landlord-tenant law or regulations are still binding on your relationship until the landlord lost his/ her right to the said property and, accordingly, your lease is deemed to be null and void at that instant. However, anytime before the foreclosure is completed, your lease is still effective and binding on both sides. Your landlord has to respect your privacy and leasing agreement. A Police should be able to stop him from doing crazy and illegal deeds.

Your landlord has no right to order you to move out of the apartment any time sooner than the foreclosure process is fully completed, such as someday in September, if that is the day the foreclosure takes place you said. His request of July 17th is certainly out of the question.

Also, after that foreclosure date, your landlord absolutely has NO ANY right to tell you what to do (He or she has nothing to do with the property. The new owner/ banker is the only person you have to listen to. You may be able to get a good compensation offer, such as a surrender key reward or a new lease. (Who knows?) All your landlord wants now is to take as much assets with him/ her as possible, even doing things illegally.

If you don't know when the foreclosure will happen, ask any real estate agent for help. They should know that. Or you can just go to your city hall to check the foreclosure posts in the hall or county public record administration to find it out.

Good luck!

JUL

2008

I was leasing a property from a prop management company for a year plus. About early June I was told the owner was foreclosing, and was given a 30day notice (until July 6th). Was told we could stay after that, but had to pay. And then it was a guessing game of when/if a notice would be on the door from whomever bought the property. THe house went to auction (supposedly) June 2nd, and was bought back from the bank. Again, supposedly. The prop management comp not really telling me anything. It was the broker who USED to be with the PMC, but left, still ? representing the owner who told me. He was trying to help her sell the home, or at least to other investors, who might let me still rent. But I would only hear from him every couple of weeks, and all the details were sketchy on if the owner still owned it or not. Apparently, she filed bankruptcy, hoping to stop the foreclosure, or delay it anyway. Well, it is July 15th, and we are still in the house. (though have found another place and are moving in a week) I did not pay rent on June and July because I wasn't sure who to pay it to. Advice I received was that the prop management would just pocket the money, since the house wnet to auction the 2nd. No one, and I mean NO ONE, has asked for rent this whole time. I don't even know where the house is in the process as far as ownership. (by the way, I had a 800 dep holding with the pmc). Once I move out, can anyone come back after me for money? Thanks

AUG

2008

Pardon my naivety but how does one check out landlords prior to renting a house? I've heard about going to the county offices and enquiring but doing that during a 300+ mile relocation can be a little difficult to say the least. Is there a FREE site I can go to with foreclosure info? Most foreclosure sites want you to pay a monthly membership.

GEEZ, I thought renting a house would be a nice move for my family but now I'm thinking staying in an apartment might be safer and less work.

SEP

2008

On the other side of the equation - I've offered renters Cash for Keys and been turned down because they were saving more by not paying rent and waiting for the eviction. They saved about $11,000 by staying for 10 months rent free, moved out leaving the place a disaster and about 4 lbs. of ground beef rotting in the bathtub. I don't know if they understood that some poor workman was going to have to clean that, but I don't feel a bit sorry for them and only hope that their children grow up more mature and responsible than their parents.

I get that question a lot from the people that have renters in their property. It's an ugly situation in every way. At least the month they are not paying the rent they can use towards moving. Hopefully...

SEP

2008

I have several clients right now who are tenants in the process of getting evicted by landlords who are in foreclosure even though the tenants (my clients) have been paying rent every month, on time. One particular couple, checked out several other rentals before being referred to me because the rental market around here (SoCA) has become so expensive. They even relayed a story to me about a house they almost rented but discoverd during the application process (by accident) that the owner was in financial difficulty and in default on his loan. That was the virtual last straw for them and they decided to try and see if they could buy.

For future reference, I'm also curious where a renter can go to check out a landlord before renting. I'm aware that they can talk to a realtor and/or other real estate professional to find out if the landlord and/or property has ever had an NOD filed but is there anywhere else they can go to find out this info on their own?

NOV

2008

I would like to know what the web site is for checking out if the house you are renting is in forecloseer. My email address is b118dewey@yahoo.com

Dealing With a Shark, You Are Out of Luck!

Gee! Time's changed. What is the new trick here? Can anyone tell me?

PS: A few minutes ago, I received this notice:

Blog Comment by Shay : On "Your rental is foreclosed on, what happens to the renter?"

11/20/2008 08:49 PM

I believe I shall go back and delete my comment(s) on the topic. Why? Because after Hurricane Paulson's tsunami, there are a mess. So many local authorities changed their laws regarding "foreclosure" that there is no simple rule or generalization for us to base on to give a "right" opinion. The politicians and lawyers make it so complicated that I'd better to keep my mouths shut; and just say: "Talk to your local lawyer."

****

So, here I am to say all my comments on this thread are void and null if they are specific to a particular situtation. Please pay money to talk to your local attorneys (Keep in your mind: even they are probably unable to catch the new regulations and advise you do the traditional way, it still is your wrongdoing, not theirs. Don't whining, no surprise you are in the most well-managed and complicated legal society, at the hands of the mercy lawyers).

NOV

2008

Thanks for a good reminder. I like your advice, to be checking out the Landlord while he is checking out YOU!

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