landlord in default (Temecula: for sale, real estate, foreclosures) - California (CA) - City-Data Forum

tdrglide · 06-09-2009, 12:44 AM

My landlord has gone into default on his mortgage. A notice of default was filed 6-6-09. He has also put the house on the market for sale but asking price is around 50% over current market value. Landlord is holding a security deposit equal to two months rent. Two different real estate brokers I know have said I should withhold the rent now due into an account at my bank and send a letter to the landlord stating this. I know what my rights are as to showing the house for sale but not about withholding rent. I do not want to do anything that might affect my credit as I may want to purchase a home in the near future. This is in Ventura county

BennyPhoenix · 06-09-2009, 08:03 AM

Witholding rent is a great way to get evicted.
Contact your local housing authority for info on what to do with your rent payments.

DMenscha · 06-09-2009, 09:20 AM

Your landlord is STILL the owner of the home and entitled to rent. You could open an escrow account and pay into that, but it's going to take 90 days from the NOD to remove him from title. I would suggest you contact him with your plans before you do anything. Ask him to place the security deposit in an escrow account. If you have a lease with your landlord any subsequent owner is going to have to honor the terms of the lease. It takes banks a long time after they foreclose to get their act together to get it back on the market and I think in general they would appreciate having a tenant, don't make plans to move out soon.

CA law says a tenant must be given 24 hour notice by the landlord to inspect or have the property shown, you can opt for less at your convenience.

BennyPhoenix · 06-09-2009, 11:02 AM

Landlord doesn't have to accept your request to place the security deposit into escrow. If/when the property reverts to a new owner the deposit is transferred to the new owner.

dweej · 06-09-2009, 11:57 AM

Here in Temecula, I have met many, many people who this has happened to. The landlord is pocketing your rent and not paying his mortgage. In CA, you have 6 months of unpaid rent before the landlord can evict you anyway. If he is foreclosing on *your* home, I would say do exactly as the RE brokers suggested. The bank will evict you once it takes over ownership of the home and you're going to lose all the rent you paid and your security deposit. I know this from personal experience, regardless of what the 'laws' say. Banks are "not in the business of being property managers" (this is a direct quote) and although it would make sense for them to want to keep a tenant, they won't. No use in throwing good money after bad. I would do the escrow thing and start looking for a new place to live.

bayarea-girl · 06-09-2009, 12:42 PM

Since a notice of default has been filed there is soon to be a foreclosure to follow. They've been doing stories about this one the news. You should check to see when the auction date is for the property. I would not trust anything the owner has to say as they might tell you that they are working with the bank or payments. If there is a scheduled auction you will get something in the mail or it will be posted. If you withhold payment from the landlord they can't kick you out and you are within your rights to withhold money for this reason. Should the landlord become current on the mortgage and you have proof you will have to pay the owner as soon as possible so that you don't get an eviction notice. Go to the housing board regarding rules and laws about this. Some landlords were foreclosed on and didn't let the occupants know and still collected rent. There was nothing the tenants could do and they after a while could not find the landlords. The people in the news were getting evicted by the banks. Also, google this on the internet and you will find several of these incidents.

Do you have a month to month lease? Even if you have a longer lease then I would ask out of the lease. If I were you I would move and don't expect to get your deposit back and don't expect the owner to have sold the place before the place gets foreclosed on. The owner is not going to put your deposit in a separate account or and escrow account and there is nothing you can do about either. But ask for it back and try taking them to small claims court. You most likely will be awarded your deposit back but collecting is another issue.

It will hurt your credit if the new owner evicts you anyways. No landlord wants to see an eviction, they don't mine bad credit but an eviction they don't mess with.

SOON2BNSURPRISE · 06-09-2009, 01:01 PM

Are you planning on moving? Do you like the place you are in? Stay where you are, pay your rent and when the bank takes the place over make them an offer to remain on a month to month basis taking care of the property for them. You may want to find out who owns the trust deed on the property and contact them. Let them know your plans if that is possible. Chances are they have many more places that are in a similar situation except that those places are empty. Renegotiate the rent with them as well. Your taking a chance here because if the place does sell your out on your backside. It cost money to evict you. Work with the current owner and the real owner and see what you can do.

tdrglide · 06-09-2009, 02:55 PM

I would like to buy the house if I can get it for what it's worth, around 325,000. Outstanding mortgage is around 550,000. Otherwise someone else can have it. There are other houses out there. Landlord is not going to get current on his mortgage. To him this was just a bad investment and he is going to walk away. But in the mean time he still wants his rent. Trying to get back as much on his investment as possible

Rent is month to month. Last lease ran out over two years ago. Month to month since.

bayarea-girl · 06-09-2009, 03:06 PM

You should move!!!!!!!!!!!!!!!!!!! Give your 30 day notice now!!!!!!!!!!!!!!!!!

If you can buy it and the bank takes what you offer then GREAT!!!!!!!!!!!! Make an offer. If he is defaulting and someone (you) offers less than the asking he can do a short sale and save himself. If he doesn't do this and holds out for $550K then it is his loss and stupidity.

Make an offer or move!!!!!!!!!!!!!!!!!!!

Once the bank takes over the property I would not trust or feel comfortable that a bank or a purchaser at auction will let you stay there. That is DREAMING and WISHFUL THINKING!

dweej · 06-09-2009, 03:08 PM

Dude, don't pay that guy another cent. Seriously. Start looking for another place to live, stat, because the banks *do not* rent their foreclosures out. As shortsighted as it may seem, and as much as we don't want it to be true, they just don't. Don't waste any more money on rent to this guy. Trust me, he thinks you're a sucker for paying him for this long. It's 100% profit to him at this point because he's not paying the mortgage. I'm sorry for going off on a tangent....this topic gets me really hot under the collar. The least owners could do is warn their tenants ahead of time, but they don't. They're too greedy. They want to collect your rent without paying their mortgage for as long as possible without any regard for the fact that one day, when you're not at all ready for it, you're going to get evicted by the bank. It happens here in Temecula *all the time*. Kids have to change schools, people have to move back in with their parents.....it's awful. He's already made the decision to walk away from this house. Don't throw money at him while he's walking away....