Ask Me Help Desk - Leasing a home and the owners are foreclosing on it. What do I do?

Hi,

We are currently leasing a home with a contract expiring on 12/31/08. We have over $4000 worth of deposits on the home also. A few weeks ago the owners called us and informed us that they are foreclosing on the home. We have put in an offer to buy the home and are waiting for the lender to approve/deny our offer. However, in the meantime the owners realtor wants to show the home. We are already approved for the loan to buy the home and have put in our offer. So I don't understand why they want to show the home? Also, does anyone out there know the laws regarding this situation? Are we required to show the home for them? What happens to our lease if someone else purchases the home? I'm just not sure about the legalities of this situation! Also, what happens to our deposit if they don't have the money to refund it?

Sorry for all the questions but thanks to everyone who reads it and give any advice!

Thank You
Amy

Actually you are in luck on the someone else is buying, if someone else buys it, and it does not foreclose, then they are obligated to honor your lease.

But are you offering to the lender the price in full? If so the lender should not even have to approve, as long as the owner approves, it sells and the mortgage would be paid off in full.

If you are offering less than the mortgage in full, this is a short sale and the lender has to approve it. They may not, I have had 4 short sale offers denied this year alone ( and they were within 5000 of the price in full.)

But yes, as long as the buyers know there is a lease on the house that they have to honor, the owners have a legal right to sell the home.

If the house forecloses, the lease is void and you have to try and sue the past landlord ( who has no money) to get any deposits back. So basically you get nothing back and get kicked out normally when it forecloses.

Possibly a lack of communication is developing between you, the owners, the realestate and the bank. I guess it all depends who you put the offer in with, the realestate agent would be my guess as who should have got the offer to present to the owner and then they either except it or reject it according to the price you offered.

You aren't required to have anything to do with showing the home for them, the agent does that, however, it would be good if you were somewhere else at the time while he is showing it.

Why don't you call the agent, inquire with him regarding the offer and go from there.

As for your lease if someone else purchases, depending on when they want in, they would give you notice and you would have to move out when they say.

Don't get any shirt it knots yet, just inquire and go from there. You obviously have a lot of first and last on deposit with them, I would be concerned about how that will go down if the house is sold to someone else.

Quote:

Originally Posted by Fr_Chuck

actually you are in luck on the someone else is buying, if someone else buys it, and it does not foreclose, then they are obligated to honor your lease.

But are you offering to the lender the price in full ?? if so the lender should not even have to approve, as long as the owner approves, it sells and the mortage would be paid off in full.

if you are offering less than the mortage in full, this is a short sale and the lender has to approve it. They may not, I have had 4 short sale offers denied this year alone ( and they were within 5000 of the price in full.)

But yes, as long as the buyers know there is a lease on the house that they have to honor, the owners have a legal right to sell the home.

If the house forecloses, the lease is void and you have to try and sue the past landlord ( who has no money) to get any deposits back. So basicly you get nothing back and get kicked out normally when it forecloses.

We went through our real estate agent, who just happens to be in the same office with the owners agent! We put our offer in under the asking price because the owners told us that they were just going to file bankruptcy on the loan and were not real concerned how much it actually sold for. I guess my confusion is with them wanting to continue to show the home when they have an offer on the table. However, we were under the impression that the owners had no say in the offer, that it is up to the lender.

Do you know if I can exercise to use my deposits as my rent in order to ensure I get my money back?

Thank you so much for the info!

Quote:

Originally Posted by tickle

Quite possibly a lack of communication is developing between you, the owners, the realestate and the bank. I guess it all depends who you put the offer in with, the realestate agent would be my guess as who should have got the offer to present to the owner and then they either except it or reject it according to the price you offered.

You arent required to have anything to do with showing the home for them, the agent does that, however, it would be good if you were somewhere else at the time while he is showing it.

Why dont you call the agent, inquire with him regarding the offer and go from there.

As for your lease if someone else purchases, depending on when they want in, they would give you notice and you would have to move out when they say.

dont get any shirt it knots yet, just inquire and go from there. You obviously have a lot of first and last on deposit with them, i would be concerned about how that will go down if the house is sold to someone else.

Showing the home is just a big inconvenience with our schedules and our dog who doesn't like strangers! So because of the dog we have to be home when they show the house. It's just a big mess all the way around!

I was not aware that the new owners (if that happens) could put us out?? That is kind of scary!

Thanks for the info!

From my experience, you have a contract with the current owner. Unless you have in some way broken that contract, the owner and whoever he sells it to is required/obligated to honor that contract. But I do suggest that if the house gets sold to someone else, you speak to them about the contract and what they have in mind for the house. No use getting all worked up for nothing, you know? :)

Well several things, as long as the current landlord is still the owner, they can refuse any offer on the home and just let it go, there is no requirement that they try and sell it.

So first the landlord has to accept the offer ( since if it is for less than the amount of the loan, it is a short sale and will effect them)
Next if it is a short sale, the lender has to consider it, but the owners are still able to accept other offers as long as they are submitted before yours is accepted. So if someone else offers full price or a higher short sale price that is sent to the lender, the lender will accept the higher price normally. But while it is stupid, I have seen lender after lender refusing short sales. So if you can afford to make a offer that is one dollar more than the loan is, the landlord can accept that since it will pay the mortgage off and the mortgage company has no say as long as it is not foreclosed yet ( and they will be glad to get their price in full)