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One of my family member's came to me with a situation, and I need some advice to tell him.
He just recently moved into a rental townhome. Long story short, he just found out the house is in foreclosure. This was not disclosed to him beforehand, before he even rented the property. The property manager claims she is just as surprised as he is, and she claims she didn't now anything about it.
He informed me they put a lockbox on the front door and the house is listed on the internet for sale, and the AD actually states the house is empty and there are no residents inside. My cousin has a lease and the property manager suggested he stop paying the owner and put the money into an escrow account. My cousin feels before he found about about this, the owner was pocketing the money and not paying the mortgage.
What recourse does my cousin have? He has a binding lease, is it possible he can be kicked out before his lease is up? This is in the state of Virginia.
It depends on who buys it. I believe that under federal law if the buyer wants to live there, your relative will get at least 90 days notice to vacate. If an investor buys it he should be able to stay until the end of the lease. I do not believe that he can stop paying his rent, as his obligation to pay rent is completely separate from the LL's obligation to pay the mortgage. But your relative should should not rely on advice from strangers on the internet.
If he has a signed lease (and it was leased via the owner and not a scam), he is subject to the tenant laws in that state, I suggest he look them up. He might have some right as to how long he can stay in the property even if it is foreclosed.
If the home is pre-forclosure, than the owner is trying to sell it - probably as a short sale. I would call the listing agent and let them know there is a tenant, but really they should have figured that out already. If it has already been foreclosed on and the bank owns it, the listing agent should have approached the tenant about vacating the property. Some banks offer "Cash for Keys" to get tenants out within an agreed upon time and without damaging the property.
One of my family member's came to me with a situation, and I need some advice to tell him.
He just recently moved into a rental townhome. Long story short, he just found out the house is in foreclosure. This was not disclosed to him beforehand, before he even rented the property. The property manager claims she is just as surprised as he is, and she claims she didn't now anything about it.
He informed me they put a lockbox on the front door and the house is listed on the internet for sale, and the AD actually states the house is empty and there are no residents inside. My cousin has a lease and the property manager suggested he stop paying the owner and put the money into an escrow account. My cousin feels before he found about about this, the owner was pocketing the money and not paying the mortgage.
What recourse does my cousin have? He has a binding lease, is it possible he can be kicked out before his lease is up? This is in the state of Virginia.
Did only the property manager sign the lease? If only the the property manager signed the lease, and the property manager will cooperate, then tell the friend to have the property manager sign a release from the lease with a return of the security deposit and tell the friend to move out ASAP.
It's entirely possible that the property manager did not know the owner was in default although nowadays, it would behoove them (us, as I'm one too!) to try to verify that the owner is not in arrears on either payments or HOA dues.
If the lease was signed prior to any action being filed, the lease must be honored. the tenant must be given 90 days Notice. Cash for keys can be offered, and if the tenant wants to go that route (we have had a couple of these lately) we simply release them from the lease and refund their deposit after they have vacated AND gotten their check.
It's becoming an even more convoluted and complicated headache every day with these situations. The banks and their "agents" appear to be using tactics that makes me think of heavy handed collectors. What a mess.
It takes about 3 month's before a property will show up in the public records as "lis pendens". If the owner didn't disclose to the property management company that he stopped paying than they don't have a clue.
We have it in our contracts with the owners that we don't handle any property with a lien on the property.
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