Is there any danger in renting a house on short sale (for sale, foreclosure)

[movingtophoenix1]

We are considering renting a house listed for sale by short sale. Other than the fact that it could sell quickly, are there any other dangers or scams to be aware of? It makes me nervous.

[altus2006]

Originally Posted by movingtophoenix1

We are considering renting a house listed for sale by short sale. Other than the fact that it could sell quickly, are there any other dangers or scams to be aware of? It makes me nervous.

With all of the houses for rent, why would you move into one that will be trafficked by Realtors and buyers and invade your privacy any day of the week?


altus2006

[Mares84]

Good point.

I would advise against this. The main reason people put their house up for short sale is because they make a deal with the lender mainly because they have gotten into trouble with payments. The lenders usually let someone stay in the house as long as they have it listed with a realtor up for short sale. So they might not be paying their mortgage but are going to collect rent from you. Not only is it illegal but if the lender finds out (which they may have a local realtor watching the home) then you will be booted out without notice. They can go lock the house while you aren't there and there for you lose everything in the home. Don't do it. Rent a legitimate house.

[rjrcm]

Originally Posted by Mares84

Good point.

I would advise against this. The main reason people put their house up for short sale is because they make a deal with the lender mainly because they have gotten into trouble with payments. The lenders usually let someone stay in the house as long as they have it listed with a realtor up for short sale. So they might not be paying their mortgage but are going to collect rent from you. Not only is it illegal but if the lender finds out (which they may have a local realtor watching the home) then you will be booted out without notice. They can go lock the house while you aren't there and there for you lose everything in the home. Don't do it. Rent a legitimate house.

I also don't advise this. However, you would not be booted out without notice. There are tenant laws that govern the eviction process. It is also not illegal for the landlord to collect your rent and not pay the mortgage. Keep in mind that the owner still controls the house, not the lender. They can do whatever they want with the rent money. You could try putting such a requirement in the lease, but would be difficult to check and enforce.

You probably stand a good chance of losing your security deposit.

If the property were to be foreclosed (a real possibility if they are trying for a short sale), then here are the federal rules for tenants:

Renters in Foreclosure: What Are Their Rights? - Free Legal Information - Nolo (http://www.nolo.com/legal-encyclopedia/article-30064.html - broken link)

Additional state rules may apply.

[glass_of_merlot]

Originally Posted by movingtophoenix1

We are considering renting a house listed for sale by short sale. Other than the fact that it could sell quickly, are there any other dangers or scams to be aware of? It makes me nervous.

I rented out that was on short sale and even though you have tenant rights, you still only have that much time to move out once the house sell. And if you don't want what somebody already mentioned, people in and out of your house all the time, I would not do it. We had our house on the market for 7 months until it sold. The tenant knew when she rented the hose it was for sale, but she got a good deal on renting it.

[Mares84]

Originally Posted by altus2006

With all of the houses for rent, why would you move into one that will be trafficked by Realtors and buyers and invade your privacy any day of the week?


altus2006

Originally Posted by rjrcm

I also don't advise this. However, you would not be booted out without notice. There are tenant laws that govern the eviction process. It is also not illegal for the landlord to collect your rent and not pay the mortgage. Keep in mind that the owner still controls the house, not the lender. They can do whatever they want with the rent money. You could try putting such a requirement in the lease, but would be difficult to check and enforce.

You probably stand a good chance of losing your security deposit.

If the property were to be foreclosed (a real possibility if they are trying for a short sale), then here are the federal rules for tenants:

Renters in Foreclosure: What Are Their Rights? - Free Legal Information - Nolo (http://www.nolo.com/legal-encyclopedia/article-30064.html - broken link)

Additional state rules may apply.

Yes, so in other words the mortgage company can legally evict you. It is a bad idea. What if you rent the house and then receive a notice a week later? It sounds like a hassle. While it may be legal for the LL to collect rent and pocket it while it not paying the mortgage company, I wouldnt want to hand my money over to someone like that. It seems morally wrong to me.

[rjrcm]

Originally Posted by Mares84

Yes, so in other words the mortgage company can legally evict you. It is a bad idea. What if you rent the house and then receive a notice a week later? It sounds like a hassle. While it may be legal for the LL to collect rent and pocket it while it not paying the mortgage company, I wouldnt want to hand my money over to someone like that. It seems morally wrong to me.

The mortgage company can evict under certain conditions after they take back the property at the foreclosure auction. At the very least, the renter would get 90 days notice. They can't do anything while it's still listed as a short sale by the owner, which could take several months to resolve. Given the uncertainties, I would recommend finding another home if you want a stable situation.