Real Estate Blog - My prospective renter want's proof of non-foreclosure!

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My prospective renter want's proof of non-foreclosure!

My prospective renter wants proof of non-foreclosure!

In this market, no one really knows what is going on with a customer's finances. Not everyone feels comfortable about discussing it, and there is really a fine line there where you have to be very professional and wait hopefully hear the truth from the customer. Then again, if it's not your listing, you really have no feel for the circumstances of the rental. Many people are renting out their properties in lieu of the current conditions because the sales are not as prolific as they were several years ago. I don't have to speak to the choir, as if you watch TV at all, you know sales are slow (However, there are people still buying and taking advantage of the market :-) ).

That being said, I have two prospective renter's right now, who want some type of documentation that the home they would like to rent is not a foreclosure issue. They do not want to spend the money to move into places they are interested in, only to find out a few month's down the road that their is a sign on the door and they have 30 days to vacate. TRUTHFULLY, I don't blame them.

How would you deal with this situation?

Is there really a safe mechanism in place to protect your customers?

Please advise.

Thank you in advance.

http://www.KarenMonsour.com, 954-464-4194

Posted by Karen Monsour,REALTOR® Broward,Palm Beach,Miami/Dade! 954-464-4194 anytime! on 10/03/2008 10:58 PM

Comments (51)

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Originally posted at: Karen@ www.KarenMonsour.com: My prospective renter want's proof of non-foreclosure!

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51 Comments on My prospective renter want's proof of non-foreclosure!

OCT

2008

Check with the owner, then check with the town if anything has been filed.

Those are some very smart renters. In our area I can contact the title company to check into foreclosure filings or we have a county website that I can use to check either by address or name myself. I would start with title or the county recorder for direction.

Karen- I don't blame your renters either. I heard of two different cases of this happening around here just today! Not sure what proof could really be other than something from the bank the loan is through saying payments are up to date :-\.... I mean if it is in foreclosure and the "landlord" says its not what are you going to get out of them if legal action was taken, since they are already losing the biggest investment they ever made probably they are losing alot of other things and theres not alot of money around either :-\

I can't say I agree with Peters check with the owner (who could just lie) or the town (since it can take several months before the town gets anything about it going into foreclosure after the homeowner has decided to stop paying the mortgage). Goodluck :-\

I donnr blame the renter, you can check with the county to see if any NOD's have been filed,

Too many tenants have been displaced by homeowners who aren't paying the mortgage. I really don't blame them for asking. Of course the owner could be current today and delinquent next month. Nothing is certain forever!

Peter,

That is hard to do if it is not your listing. Also, sometimes if their is a lien or lis pendens it does not show up right away. Thanks for your opinion though.

Karen - it happened TO ME years ago when we rented a home in Coral Springs. We had moved from Atlanta, rented from a rental company, were there two months and one day we got a notice that we had to be out of the house in 24 HOURS!!! We had an 11-month-old baby, a teenage step daughter (to me) a cat and a parakeet and a house full of furniture. We managed to get the furniture in storage and a friend put us up in her motel on the beach until we could recoup and find another place.

Smart renters, as Terri said. Back then we didn't have the internet, so checking on foreclosures wasn't so easy.

Terri,

Thanks to you as well. I have asked the listing agents and they have no idea...Which brings me to the question...do you know your customer? Even then, there are some who wouldn't be honest just to get the sale...that's the sad thing.

Karen- First, I won't work with renters. Too much liability right now and it is too much work for the pay.

But I would tell your client to go seek the advice of an attorney. Do not fill out the lease we have on FAR BAR. You as an agent can not add to a lease or change a lease in Florida. Only attorneys can draft up leases. THey need to hire an attorney to draw up a lease that will protect them. There is nothing in the law that makes a landlord pay the mortgage payment with the rent money, nor should there be. But there may be a clause the attorney can put in that they landlord must show proof of the mortgage being current each month.

Chris,

Seriously, that is also my issue. The agent representing the rentor may just want the sale so bad they won't tell the truth. AND on top of that, how many agents are going to let you talk to their customers?

Smart thing to consider.

What about having a title company do a short search? Or, in our state we have the court records ONLINE!...you can search a persons name and any court issues would appear: divorce, law suits, collections, tax liens, judgements, evictions, foreclosures. My assistant now checks that search before any of my appointments so I know what I might be walking into. Most of the time nothing at all. But with realtors being murdered these days, I want to know if the person calling has any "issues" including violent behavior. I have even turned down one lead that was a seller connected to a prominent drug dealer involved in a murder case. With so much info available online, see what you can find out before it is too late!

Brett,

Yes, I could. However, what happens if it happens 3 month's after they move in? How do you know if these people are going to stay current, even if the situation is OK at the time the rental agreement is signed?

Truthfully, renting right now is risky business.

I've been relying on a few good agents that I know that know their customers and their situations at the present time.

It is expensive to move.

Thanks for commenting.

Karen

KK,

Exactly, that is what I mean. You never know from one month to the next.

Katerina,

Thank you for the advice. I don't work with renter's either, however, these two people were referred to me from recent customers, so I thought it prudent to help them.

Pam,

Thanks,

Pat,

Someone will want paid to do this. It's a good idea though. I carry pepper spray in my pocket, not that that would be a life saver, however, you can never be to careful. I check people out. And, one of my friends is a federal marshall. When I'm going out with a new customer who I'm not quite sure about. I give him all the info. Name of customer, places I will be showing...if he's not working at the time, I'm sure he's lurking out their watching. So great for friends like these.

I don't generally work with renters, but becuase so many are sitting on the sidelines, I'm looking at them as future buyers. We don't have a ton of foreclosure activity around here, BUT I heard a couple of stories about this situation. Since we don't have that many foreclosures (relative to other areas) the fact that I am hearing stories about renters finding themselves in foreclosed properties says a lot - I totally understand where they are coming from. I now suggest that renters consult an attorney to draw up the lease with said protections. I also know that some condo complexes are adding a ton of riders making sure that the maintenance is covered when owners rent...which means that not everyone is paying up with resepect to monthly fees.

Hi Karen,
I have to say that although the owner or manager might feel a little offended by the would-be-tenant's request about any foreclosure procedings, it is their right to know. In this market everything is possible and the tennant would be risking his/her deposit money and rent for a house that might not even be available to rent. All the owner has to do, is to provide them with a copy of the latest mortgage payment showing that payments are current (of course personal info blocked)

Ruthmarie,

What can an attorney do? I'm just not sure I understand. If the property is foreclosed on, what can an attorney do to protect the renter?

Meli,

While that is true at the onset, what happen's if they don't pay, say three month's down the road, and then 6 month's later the property end's up in foreclosure...

What then?

Karen- I was just thinking (yes I know sometimes I do this to much lol) but..... Do you think requesting something like this initially may give the homeowner who is only trying to rent to cover the mortgage right now anyways an idea.... kind of the old "Why didn't I think of that" :-\. Yeah I know, Oh joy something else to have to think about... sorry

Also... I forgot to mention one of those 2 foreclosed rentals.... THE LANDLORD DIDN'T OWN THE HOUSE! He found a foreclosure that wasn't on the market yet that was in livable condition, broke in changed the locks, removed all notices and rented it out, a few weeks later the company the bank had go to secure the home and assess the damages came out and shocked the heck out of the renters who already sent their next months rent to a P.O. Box address.

OCT

2008

Chris,

Truthfully, many people are renting to cover the mortgage, or enough of it to keep them out of a short sale or foreclosure situation. That is why I posted this blog. Renter's, at least mine are worried...at least in this crazy market.

Karen- Yeah I understand the whole rent should cover the mortgage thing my parents have been RE investors for over 20 years lol. Things have definitly changed though, they just sold a house they owned for over 9 years today and had to bring $6,500 to closing, where 3 years ago if they would have decided to sell it, they would of walked out 45k heavier :-(

Definitly can't say I blame your renters or any other renters for wanting this information, the hard part is knowing if the info is accurate and honest :-\

Being a property manager in this current market this has come up quite a bit for our company. We had an incident not too long ago where a tenant had no warning and had to move because of foreclosure. It was a terrible ordeal so our company is trying diligently to verify mortgage payments are being made. I actually today was checking into verifying if a property is in foreclosure and was referred to teh title agencies. I did not get to follow through with that and will on Monday. Your customers are smart to worry about such things. With this market a lot of houses are being listed as rentals to save them from foreclosure, but with any it is too little too late.

Karen - Landlords have been checking out prospective renters for years, it's only fair now that renters should have the same option now.

I work with a lot of first time buyers and this year I have picked up several clients who were former renters who got evicted, even though they paid their rent every month on time. They all were in 12-month leases and the banks that foreclosed on the property did nothing to reimburse the tenants for their deposits or the remainder of their leases. This is what they got for being good tenants.

I don't blame tenants for being nervous. I check the tax records first so see if an NOD has been filed, but you also have to check with the town and the Registry because liens for non payment of taxes are not noted necessarily on the public tax records. There are many signs to look for to determine if the homeowner is in financial trouble. We are in a sad market for sure!

Chris,

My parents also have properties, one of the renter's wants to buy one of their properties. My son and I both sell RE and told them not to do it now. They don't have to sell. No reason, the property is paid in full and it brings them income.

Would not be prudent... :-)

What really iritates me are the real estate agents who keep sending them post cards wanting to list their home(s). Everything they have is paid in full. They are not in distress, quite the contrary. I even called two of them the last time I was home and asked them to stop as I was a Realtor as is my son and we didn't need their help/advise, or any other intervention...

They are still getting them. My mother is upset and tired of it...Is there no end?

Chastity,

THANK YOU SO MUCH FOR POSTING HERE!!! No kidding and please do give us an update Monday when you find out! This is such a great network, so much information and talent.

Please let me know, either by blog or email. Thank you again!

Donne,

That is the point of this blog. What I'm finding is talking to agents in my new office who know their rental listing customer's well and know this will not be an issue is PURE GOLD!

Cynthia,

Please fell free to elaborate your post here. This is important and if you wouldn't mind...give us the list.

Thank you in advance.

How do you prove that something ISN'T true? They're probably wanting to assess the likelihood of a foreclosure in the future, not just whether action has been started currently. I see no way to address that without revealing all the personal finances of the owner which isn't appropriate.

Richard,

You can't, however, it does cost money to move if you are renting a property that is not a small 1/1...then they have to put down last months rent and a security deposit. If people are in bad shape, do you think the renter's will get this money back...not on your life! It's not fair.

If you read the comments...you will understand.

Appropriate? Are you kidding? Disclosure is appropriate...at least in this day and age.

Karen- I know your how that goes too. I have alot of respect for RE agents especially those who have stuck in there through all of this....

W/ 1 exception lol for 2 years (he finally stopped last year) this agent called, and called, and sent flyers, post cards, and even CERTIFIED LETTERS basically begging my parents to list with him (and he is actually a fairly well known respected agent with a larger company who wasn't hurting for listings as it was). Anyways after repeatedly kindly letting him know that they were not interested in listing any of the homes and already have a close circle of friends in the business (from both being investors and my mother being a M.O.) that they already had all of their R.E. needs being taken care of in that regard. One day I stopped by and my mom was telling me about how she got 4 letters in 3 days from him.... and he called while I was still there (thanks caller ID lol) so I just laid into him, and told him that if he didn't immediately take my parents off his mailing and calling lists we would seek legal action for harrassment (not even sure if that was possible lol) and he hasn't called or wrote since. Don't get me wrong like I said I completely understand your business I have been around it for years and Ashlee actually has her license, but sometimes when people (in any business) get to pushy or cross that line you have to let them know your not going to take it without a fight. I'd look into the harrasment laws and eventhough I am sure they don't want to go to court over it, the pushy sales guy doesn't have to know that lol

Chris,

Not to worry my friend, we are both known...to say it like it is...and post our opinions. One good thing about us is, we say it like it is...no guessing...nite! It's late...

Gosh darn addiction to AR...LOL

Interesting discussion. It seems obvious that this would be a huge concern and consideration for tenants. There is only so much you can do, but do it.

Ask the landlord to give them a copy of the most current mortgage statement so they can see it up to date. I feel for some of these tenants!

Karen, Your tenants have every right to make sure the property they are getting ready to rent is not in foreclosure or going into foreclosure in the future. A smart thing to do is have the rent paid to an escrow company and have the escrow company pay the mortgage payment prior to disbursing funds to the landlord. If the rent is not enough to cover the mortgage then the landlord should have to "seed" the escrow account. If the landlord is not willing to do this then I would move on to another a property. Rentals are a dime a dozen.

It's next to impossible to guarantee no foreclosure. Best you can do is advise them to take all the steps available to guard against a landlord foreclosure.

1. check the current status. This can be done with some work at the county websites and a little easier at www.RentalForeclosure.com (disclaimer: I am a the co founder of this website)

2. Use an addendum to the lease to further protect the tenant. We have an addendum template that can be used for reference at http://www.rentalforeclosure.com/foreclosure-addendum.pdf The most common question we get from renters in this situation is "do we still have to pay rent", unfortunately the answer is yes unless they have protected themselves in the lease. If you come across a landlord that's not willing to sign an addendum like this prior to renting, you're probably looking at problems down the road.

3. Stay diligent as a renter. Be proactive, keep checking on the status of your rental. On our site we offer a service called E-Notify which renters can sign up for and be notified if their rental goes into default.

Karen - I spoke with someone about this last night and they suggested the same thing that Bryant suggested. I also second the motion that if the landlord doesn't agree to this, then move on.

Unfortunately, good tenants who pay their rent every month on time and take good care of their landlord's home are fast becoming just another group of innocent victims in this housing mess. In a way, it can also be a good thing for some of us because many tenants get so frustrated with the whole renting process that they end up just buying themselves.

I've personally picked up several clients this year who became frustrated with trying to continue to rent after being evicted from their rental because their landlord wasn't paying the mortgage with the rents that they sent in every month.

One particular client told me a horror story of trying to find out if they new rental they were applying for was in foreclosure and everything they checked indicated no but by sheer accident, they discovered that in fact the property had just received an NOD! That's when they gave up renting and got approved to buy.

BB,

Thank you, that is good advice. Didn't think of it that way.

How's TLW? Hopefully she is home and feeling better. K

Shawn,

Thanks for the information, I will check it out. Cannot be too careful these days.

Karen, I haven't run into this situation yet - but I can understand how renters can be feeling uneasy these days too. These are crazy times indeed.

OCT

2008

JIM,

Don't think for one minute, I don't suggest this to my great customer base...why risk it?

OCT

2008

Bryant is one smart cookie... I've not heard of that but it sounds like a great option to me.

OCT

2008

Donne,

Thank you for your opinion, well taken. It's tough all around these days...I am careful as to what listing's (rentals), I show my customers...

Chuck,

BB is a smart cookie, include with him: Shawn, Jim and Laura and other's as above...I totally appreciate everyone's input here.

It is a difficult market as we all know...I'm careful to check out the renter's prior to showing them properties. What amazes me is the number of listing agents who I question re: their situation, that have no clue.

OCT

2008

You can tell them to check out the Property Appraisers office. There is no guarantee that the info is current or correct, but at least that should be a starting point.

NOV

2008

Karen - I don't know how I could have missed this blog with all the groups I have, wrong! I think this is a great post and I don't blame the renters for wanting this type of documentation.

This ones for you Karen, great job! Featured!

Here you can stake a claim at the county recorder's office that you have a vested interest in the property and that you want any notices that affects the property sent to you personally. You can also check the county recorder's office online for breaches, notices and liens.

I think the best way to do this would be to escrow the funds and have incoming rent payments to go the escrow office and they would have to pay the mortgage out also so that the renters could feel the most secure!

NOV

Renee - You are just full of great information, maybe we need to do lunch and talk business!

MAR

I like Karen's idea to put the rent in Escrow. In Virginia, the lease can be registered. I'd also add a clause to the lease stating that the mortgage, taxes, etc., will be kept current at all times. If they are not kept current, the lessee has the option to break the lease, take their deposit, and move (without penalty).

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