[kmanthl]

My daughter is renting an apartment in a 3 storied private residence. She received a letter from an Indenture Trustee (owner and holder of the mortgage) asking for her to remit the rent which will not be repaid in case, the mortgage litigation is settled by the landlord. My daughter is depositing the rent into a separate account as done by other tenents in the building.

I want to know what my daughter should do and what are her rights?

WHEN WILL THIS foreclosure case get settled. When settled, what will happen to the lease? Will it be valid?

Can the mortgage holder evict the tenent during this process and how fast?

Is it good enough to keep the rent in a separate account?

What happens to the security deposit paid to the landlord?

[rockinmommy]

So has the foreclosure actually happened, or does the building owner still have a chance to save it? Has she talked to her landlord?

If she's living there she does owe the rent to whoever actually OWNS the building. Depositing it like she has is a good step. I'd send them a letter back and include something from the bank showing the deposit (black out acct numbers, etc.). See what they do.

Ultimately she should probably start looking for another place to live. Unless the owner can save it and then stay completely current the property will eventually be auctioned off. It's possible that whoever buys it will just want to continue renting the units out and will let the tenants stay who are there at the current rate of rent, etc. But they could also give the tenants very short notice to vacate.

As for her deposit, chances are great that it's lost with the original owner. She could sue him for it, but if he's being foreclosed on it'd probably be like getting blood from a turnip.

[ScottGem]

A foreclosure voids any leases in place. So as soon as the foreclosure is completed she will remain there only on the forebearance of the mortgage holder.

I'm bothered by this letter. I would say that the Trustee has no right to claim rental payments until the foreclosure is finalized. Frankly I would get together with the other tenants and use one account, each depositing their rent into it. Then inform both the landlord and the Trustee that this is being done. I would also send a monthly accounting to both.

Seeing this is a private residence, the likelihood of someone buying it to maintain as rental property is small. Is she under a lease currently? When does it expire?

Generally the tenants will be given a reasonable time to find new lodgings once the foreclosure is finalized.

[Fr_Chuck]

Yes as noted a foreclosure voids all leases, but until it is actually foreclosed on, rent is due and payable to the actual owner of the lease. So normally if rental payments are not paid to the lease owner, they can be evicted for non payment. At times for issues of safety or improvement a escrow account can be set up, but normally this has to go along with legal action on the parts of the tennants.

[ScottGem]

I agree with Chuck about escrow account. But in this case, you have someone telling the tenants to make payments to someone other than the owner. I'm not comfortable that this Trustee has that right especially when they tell you if the landlord wins the money you pay them may not be refunded. On the other hand, you might get in trouble by paying directly to the landlord. By paying to an escrow account and making sure both parties are aware that's being done, then both parties know the money will be there once litigation is settled.