Imagine this: You're at home, having a weekend cookout with friends. There's a knock at your door. It's a real estate agent. He explains your landlord lost the property when the bank foreclosed. He wants to know how quickly you can move. He offers you a hundred dollars if you can move by next weekend, if you can't, they'll start the eviction process immediately.
What? Eviction? Wait! You've been paying your rent. You have a lease. The owner never said anything. What's going on?
This scenario is happening with increasing frequency. Renters are shocked to learn that even if they pay their rent, landlords have no obligation to use that money to pay the mortgage payment. In most cases, the renters can forget trying to recover their security deposit.
What can you do to protect yourself?
First, consider renting from a professional, established owner/landlord. For example, apartment or other rental communities are usually a safe bet, plus they often offer other services and amenities not found with privately owned homes.
If you can not find a rental community that fits your needs, I suggest you contact a real estate agent who can help you evaluate the risks associated with renting from private landlords.
You run a lower risk of running into this situation if the property was recently purchased by the current owner or if the property has been an investment property for many years. If the owner had listed the property "for sale" or "for rent", beware! These are desperation moves by an owner. Owners in this situation have been unable to sell their home and are usually in financial distress.
After you've moved in, keep your eyes peeled for other signs. If an owner fails to conduct maintenance on the property, if the landlord seems to be dodging your calls, or you see bank notices addressed to him, these could all be a sign of problems to come.
In the "good ole' days" the landlords screened the tenants. Today, smart tenants are screening their landlords, too.