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Tenants Rights & Foreclosure

Lots of un-sold homes dump into the rental pool as property owners struggle to make mortgage payments on vacant houses that didn't sell.

Many investors in our area have seen their cash flow eaten up with higher property taxes and insurance costs. These days if you can break-even on a rental, you're doing pretty good.

All too frequently I see the same name several times on the Lis Pendens list

- a sure sign that an investor is going down.

I've gotten used to that but what bothers me is that the tenants have little or no rights - all too often I encounter a tenant that has been paying rent but the property owner has not paid the mortgage payments. Fortunately, in this state, the occupant of a property is included in the service list. Most of the time, the serving of the summons is enough to send a tenant scrambling to move out.

What about tenants shopping for a home to rent?

I tried to put myself in the position of a tenant looking for a rental and thought of a couple of ways a tenant can avoid being caught in the crossfire of a foreclosure:

•1. Confirm there is equity in the property which is easily done via the public records or a Realtor friend. The thought being that the odds are that properties with equity are less likely to be foreclosed.

•2. Include a clause something to the effect that if the tenant is forced to move due to the Landlord not paying mortgage payments (or taxes), then the Landlord may be sued for the Tenant's moving expenses and damages. Such an agreement, if written correctly, would (should?) probably hold up in small claims court.

That's as far as I got. Not really sure how to protect the tenant but apparently there is nothing criminal about a Landlord that doesn't pay the mortgage payments while collecting rent (although most mortgages have a clause where the borrower is supposed to turn over all rents to the mortgagee)

Any input from Property Managers out there who have included language to protect tenant rights in rental agreements or leases?

Posted by Wendy Smith on 05/28/2008 12:33 PM

Comments (6)

foreclosure, behind in payments, mortgage default, tenant

This post has been included in Florida Information Pinellas County, FL Information Clearwater, FL Information

6 Comments on Tenants Rights & Foreclosure

It is very sad when tenants have been paying their rent on time and they get squeezed out because the mortgage has not been paid by the seller.

05/28/2008 12:38 PM

by Bob & Carolin Benjamin - E Phoenix Arizona Real Estate (The Benjamin Team - Keller Williams Integrity First Realty )

Hello Wendy,
nice to see you, btw renters here are growing, reason? foreclosures, great information you provided as always :P
Ray Saenz

06/24/2008 12:51 AM

by Aurora Colorado Real Estate Ray Saenz, Colorado Realtor (United Property Brokers, INC)

Ray,

Rentals are growing here in Ohio as well.

Christina

07/15/2008 07:18 PM

by Christina Asad Edwards @ www.DaytonOhioHouse.com (Real Living Realty Services - #1 in Ohio!)

I am in a situation where im renting a brand new townhouse. the builder was unable to sell, so they rented the properties out. I pay every month on time. I got a notice stating the home was in default. I contacted the builder and they acted as if they were unaware the home was going into foreclosure. They called me back later that day and said the owner is letting the home go into foreclosure. They advised me they would place me in another unit. I continued to pay rent. Weeks later the home they were going to put me in is going into foreclosure as well. I talked to a few other tenants in the community and he is letting 15 townhomes go into foreclosure yet he is still demanding rent from families. Now I must look for a place to go. My fiancee is going to Afganistan and I need to move before he leaves!! Im frustrated and I feel cheated. I dont feel I am protected>..... help!! Please

07/16/2008 12:49 AM

by marie

Marie - it really boils my blood when I hear stories like yours. There isn't much you can do - in Florida, anyhow. Maybe at best file a civil suit, small claims court maybe but I suspect the builder would just cry poor-mouth and you would be out all your filing fees and court costs.

Maybe you should just stop paying rent. What's he going to do? Evict you?

07/22/2008 07:26 PM

by Wendy Smith Real Estate

I live in a Section-8 3 bedroom duplex. I recently found out through my neighbor on the same property that the owner has not paid the mortgage for the last couple of months . Myself and the neighbor has made several attempts to contact the landlord regarding his mail that came to neighbors house. He has not returned any calls over the last 2 weeks. I was just wondering what do i do in this situation. Please help, I do not want to lose my Section-8. Thank you

09/24/2008 08:11 PM

by destiny

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