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I'm trying to help out a friend and her family, they rented a home gave deposits/1st/last and now found out that the property owners haven't paid the mortgage for awhile and that the home is in foreclosure, the property taxes have not been paid for this year also. They were told not to pay anymore rent as the property owner is not using the money to pay the mortgage, and just wait till someone comes with a court order to get out.
All their money that they have is tied up with this home, any suggestions on what they should do? With two children I think they have some rights and can't be forced out immediately?
This is a tough one. They could kill utilities at any point and your folks would have to get out. If the owner has their money and they are forced out by the bank they maybe SOL.
If they are not paying rent & living there free, they might consider that as their deposit refunds.
The clock is ticking and they may be forced out of the house. Or they may get several months of free rent.
First off, you're in Florida, right? They can't just shut the utilities off. The bank, should they repossess would have to give them notice to vacate.
Who has their security deposit? Who advised them to 'stop paying'? They are in contract with the owner of the property. If the owner is or isn't paying their mortgage with the rental money they are collecting is not their business, nor does it relieve them from following through on their contract. For all anyone knows the owners could be working out a loan modification with the bank.
If they rented through a property management company their security deposit should be secure.
They should call an attorney or call the housing authority to find out what their rights actually are, who, if anyone they can sue for damages, etc.
Last edited by palmcoasting; 06-01-2008 at 02:43 PM..
Reason: can't spell. :)
So.. I go to this bike shop, or car dealership or grocery store etc.. I discover that owner of said establishment is taking the money from sales and going on vacation instead of putting the money back into the business. So does that mean I get the bike or car or groceries for free?
Other points- how do they know the owner is really in default. Did the owner tell the renters that? Was it a rumor? Did the renters see a notice? If there was a notice, still how do they know? Maybe the bank made a mistake? Even if the owners were in default - there might be a deal worked out (as someone posted earlier).
Also, how do the renters know that their money wasn't used for the mortgage. A lot of landlords are taking in rent that is less than the mortgage. Maybe the owners were putting all the rent and then some towards the mortgage but it still wasn't enough.
I just read an article by Benny J Kass (attorney) about this. According to him, it depends on the state, but there are generally rules in place that protect a renter until the end of the lease.
Last point - do the renters really want an eviction on their record?
They just need to keep really good receipts - pay by check or credit card only.
Also.. if the owner is having trouble paying the mortgage now, imagine how much trouble they are going to have if they don't get the rent any more!
Quote:
Originally Posted by shenane
So.. I go to this bike shop, or car dealership or grocery store etc.. I discover that owner of said establishment is taking the money from sales and going on vacation instead of putting the money back into the business. So does that mean I get the bike or car or groceries for free?
Other points- how do they know the owner is really in default. Did the owner tell the renters that? Was it a rumor? Did the renters see a notice? If there was a notice, still how do they know? Maybe the bank made a mistake? Even if the owners were in default - there might be a deal worked out (as someone posted earlier).
Also, how do the renters know that their money wasn't used for the mortgage. A lot of landlords are taking in rent that is less than the mortgage. Maybe the owners were putting all the rent and then some towards the mortgage but it still wasn't enough.
I just read an article by Benny J Kass (attorney) about this. According to him, it depends on the state, but there are generally rules in place that protect a renter until the end of the lease.
Last point - do the renters really want an eviction on their record?
They just need to keep really good receipts - pay by check or credit card only.
I had a similar question from a neighbor. The were served foreclosure papers as being the tenants and didn't know what to do....If they stop paying the rent they can get bad credit, which they don't want...what will happen to their security deposit...so they are moving out and won't pay last months rent so the owner can use that for the last months rent.... Some renters can stay for a year since foreclosures can take very long, but it is a very unsure thing and not very pleasent idea to have to go to bed and think about what will be the next day.... The tenants I know wanted to make even an offer on the home but the owner rather files for bankruptcy and doesn't want to do a short sale.....which to me sounds impossible since he has an income from the rent, but I don't know much about bankruptcy....
First off, you're in Florida, right? They can't just shut the utilities off. The bank, should they repossess would have to give them notice to vacate.
Who has their security deposit? Who advised them to 'stop paying'? They are in contract with the owner of the property. If the owner is or isn't paying their mortgage with the rental money they are collecting is not their business, nor does it relieve them from following through on their contract. For all anyone knows the owners could be working out a loan modification with the bank.
If they rented through a property management company their security deposit should be secure.
They should call an attorney or call the housing authority to find out what their rights actually are, who, if anyone they can sue for damages, etc.
*******************
Thank you for your comments, an attorney told them not to pay, they've gone to three attorneys and gotten three different answers. The property management company had no idea that the house was already in foreclosure when they rented it to my friends. I will pass along all of the comments to my friends. Thanks
From ,what I understand, by law, they can't collect rent if the house is in foreclosure. I have a friend that has a friend who got caught doing this and now is spending 5 years in jail. So, it's a sticky siuation.
From ,what I understand, by law, they can't collect rent if the house is in foreclosure. I have a friend that has a friend who got caught doing this and now is spending 5 years in jail. So, it's a sticky siuation.
Can you explain that? How is it illegal for the owner of the house to collect rent payments? They own the house. It's their property.
The property management company had no idea that the house was already in foreclosure when they rented it to my friends.
That, IMO, is unforgivable. I run any house coming to me for rent through the records to make sure there is no lis pendens filed on it. I interview the owners as much as I do the tenants. It's part of what a property manager is supposed to be doing. What a shame.
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