[chippynole]

My husband & I leased a home in South Florida for a 1 year lease term. Money required up front were first, last & a security deposit. One month ago, April 2008, we were served papers from the court house that the house were are leasing is now in foreclosure. As we flipped through the pages, we saw that the owners did not make payments since December 2007!

We consulted with a real estate attorney & he said that we had to file a motion for extension to slow the whole process down, since a response from the original foreclosure notice was needed within 20 days.

Once confronted, the owners said that they were in foreclosure but not going to go through with it. They are currently trying to sell the house through a short sale. My husband & I have been paying our landlords a salary instead of rent that was going towards a mortgage.

Once our landlord was told that we would be moving out early, before end of lease term, & to use monies paid up front (security deposit & last month) as the last 2 payments, they are threatening us with eviction & small claims court.

Our real estate attorney said that legally they do not have a right to file an eviction since the house is in foreclosure, since the bank is in control of the property. He also said that we would be able to stay in the house until end of lease term, September 2008. To avoid problems, we have decided to leave 3 months early, end of July. The landlords only want us to stay until end of June. How are we in breach of contract if the owners/landlords were the people first to be in breach of contract?

Therefore, the landlords have also threatened to lease out the property. Can that be done - can a house in foreclosure be leased?

Are we doing the right thing & is it true that the Florida law is on our side?

[Fr_Chuck]

I think you may want to get a second opinoin from another attorney.

The bank does not control the property until they actuall foreclose, unto that time the land owners still own it. Also no you are not paying them a salary, you are paying your rent, which you owe by your contract ( lease) with them, it is actually legally not your business what they do with that money.

Normally, yes they can evict you if you don't continue to pay until the home is actually foreclosed, being behind and in the process is not being foreclosed. If you break the lease prior to the end of the lease, or prior to it being legally foreclosed, yes, they can do everything the lease says they can do. Now since it is in foreclosure the courts may side with you some, but in the end, the courts have to go by the lease agreement.

And no the landlord is not in breach of the contract yet, they are behind, and it appears they will be in breach, but until the very last day before the foreclosure happens, they still owe the property and have the right to save it from foreclosure.

Forecloruse is a process, but it does not happen till the ownership of the property actually happens

If the landlord is willing to let you out early June, then they want you out early, so it appears it can be agreed on.

As long as they own the home, they may rent and lease the house

[ScottGem]

I agree with Chuck, your attorney seems to be giving you incorrect advice. As Chuck pointed out, until the foreclosure is completed, the landlord still owns the home. As long as that is the case you are OBLIGATED to continue to make payments according to your lease. If you don't make the payments you can be evicted. The landlord can also sue you for unpaid payments up to the end of the lease or the date of foreclosure (whichever comes first). While the landlord can apply a security deposit to unpaid rent, that's THEIR choice not yours. On the other hand, the last months rent can be applied to the month in which you vacate.

The landlord does not have the right to tell you to vacate unless you have violated your end of the lease. However, as soon as the foreclosure is complete, your lease becomes void. The new owners (either the bansk or someone else buying at auction) can tell you to immediately vacate. Normally you will be given a reasonable amount of time, even if you have to petition the court.

What the landlord does with the rent money you pay is none of your business. If he wants to pocket it and not pay his mortgage, that's up to him. He doesn't even have to tell you that the house was in foreclosure when he rented it.

If he's trying to do a short sale, have you considered making him an offer? You may be able to get the bank to assign the mortgage to you and you pay the arrears. Could be a baragin for you.

[Kizziemari20]

It sounds like the above advice are landlords.. haha

First of all, you have a right to "covenant of enjoyment" of the property you are leasing. If you are served papers of foreclosure, that voliates your right to enjoy this property, The likelihood of them evicting you is slim to none. They are in FORECLOSURE! Technically, it's fraud what people are doing now and days, but, it's reality. Renting out properties they know they are not paying for. It's terrible.

Anyway, if that moron goes to court to evict you, he's going to look like a fool. It will cost him money and time, which if he didn't make a payment for that long, it's probable he's not intended to save the house. He's scary you into giving him money. I had the same situation happen to me... She kept saying how she was going to do this and that, and in the end, I won. I would have sued her immediately for the return of rent paid plus moving costs, etc. pocket your money, than move out. Don't give them a penny

[ScottGem]

it sounds like the above advice are landlords.. haha

Well Chuck is a landlord but I'm not. Not sure where you are getting your info, but its not entirely accurate. The legal fact is that, until the a foreclosure is final, the current owner is still the legal owner. They can stave off the foreclosure and continue to be the owners. Until the peoperty changes hands the tenants are bound by the terms of the lease. As long as the property has not changed hands, the tenant has the "covenent of enjoyment".

There is no reason for a tenant to be served papers of foreclosure until AFTER the foreclosure is final. They might be sent a notification of a PENDING foreclosure, though.

I don't know what happened in your situation but I've seen more than a few situations of this type. With the exception of California. The laws are all on the side of the landlord here. As long as the landlord owns the property, the terms of the lease are valid. Another fact here is you don't know what the landlord will do with the money. But if the tenant withholds the rent, it may force the landlord into foreclosure and then they can sue the tenant.

[Kizziemari20]

In situations that are most common, are, the people owning the home, rents it out, pockets the money, than lets it foreclose. The property values have dropped dramatically, why would they save a house they only rent out? There is no investment for them. If they haven't paid a penny for like, a year, what makes you think they will get any simpathy from a judge? They are fools.

And I got served as a tenant the FIRST day the foreclosure process happened, not when it was final, it's still in the beginning phases right now.

anyway,
they are committing fraud. It's theft. To bad it's not criminal yet, although judges can request prosecution.

The victims are the tenants, not the owners. While the owners are in the homes, most likely not to lose that one, the tenants they rent out the investment property are forced out on the streets. Who do you think they will have sympathy for in an eviction? Get real. They are frauds.

Yes, there are people who want to save the investment property, but why?? There is no investment now? The values dropped, why save? Get my point.

[ScottGem]

I don't disagree that tenants are being victimized in these situations. But do you really think most landlords are going to walk away from a property they have invested money in? That doesn't make any sense either.

Sure there are some landlords who have little invested in their property and are renting just to get as much as they can out of it before its foreclosed. But these are the exceptions not the rule.

As to your being served, I don't know what you received but a tenant can't be "served" since they are not a party to the foreclosure. All that can happen is that they are notified that the process has started as an interested party. But they are not involved in any legal action so there is nothing to serve them on.

[Kizziemari20]

Just by you saying I didn't get served, makes me believe you don't know about being a tenant in a foreclosed home and not much of other things either.

I did get served, look up your local court and you will see that Tenants get served. I have a interest in the property, therefore legally I have to be involved in all actions in the foreclosure.

If a owner consults an attorney about back payment, the first thing they will ask is how much is your payment and what is your property valued at, any attorney now adays, will tell them, let the home go (if it's an investment property). They will not be able to survive the economy, and it will take at least 10 to 15 years to recover any type of money. Trust me, I use to be a homeowner and tenant.

I'm not stupid, I know what's up

by the way, where are you from? What state?

[ScottGem]

A foreclosure is an action between a lienholder and a homeowner. No one else is involved in such an action. If the property is being leased to a third party they might be notified of the action, but they ARE NOT A PARTY TO IT! Only parties in an action get "served". You don't seem to understand what a service is in legal terms. Notification and service are different things.

A tenant has no legal interest in the property. I don't know where you get that idea. All a lease does is give a tenant the right to use that property under the terms of the lease.

Sure there are some unscrupulous landlords who may take advanrage of tenants. But most foreclosures are people who got stuck in the sub prime mess and decided to rent just to get some money hoping the housing market improves. From the OP's description, it sounds like their situation. You obviously had a bad experience, but you can't assume your bad experience is the norm.

[Fr_Chuck]

Well of course this is the legal board, not the justice board, or the what is fair board,

The truth is, except for California, a landlord who is in the process of foreclosure is legally due his rent and can evict the tenant if they do not pay. ** California does have protection laws on this...

So yes, the landlord can evict and the fact he is in foreclosure status does not have any current bearings in any state but California.

As a tenant they are normally notified with a "John Doe" notice to inform them of the action, but even that depends on the state and how the foreclsoure happens. Since many banks don't follow all of the laws esp with those of service people serving in war zones ( although the new law will give them some extra protection ( 9 months after they return back to clear it up) But beyond notification, there is little rights and little that the renter can do,

[LisaB4657]

First of all, you have a right to "covenant of enjoyment" of the property you are leasing. If you are served papers of foreclosure, that voliates your right to enjoy this property,

No it doesn't. Merely receiving notice that the landlord's lender is proceeding with a foreclosure does not violate the tenant's right to quiet enjoyment. The tenant's right to quiet enjoyment is not violated until the tenant is prevented from using the property. That doesn't happen until the lender owns the property and decides to evict the tenant.

The likelihood of them evicting you is slim to none. They are in FORECLOSURE! Technically, it's fraud what people are doing now and days, but, it's reality. Renting out properties they know they are not paying for. It's terrible.

Technically it's not fraud. I agree that it's terrible for the tenant but it's not fraud.

It appears from your posts here that you were victimized by a malicious landlord. I'm sorry that happened to you. But that doesn't mean that all landlords who are going through a foreclosure are maliciously victimizing their tenants. There are thousands of people who owned homes and had to relocate for one reason or another and couldn't sell their homes. So they rented out their homes, hoping that the rent would cover the mortgage payments. Sometimes it didn't. Or other things came up. Maybe they lost their jobs. Maybe they had major medical issues and no health insurance. Maybe that rent was the only money they had to live on. Just because a landlord accepted rent from a tenant and then didn't pay their mortgage doesn't mean that they committed fraud.

[rockinmommy]

Scott, Lisa & Fr. Chuck are all correct.

Kizziemarie, I believe you were unfairly taken advantage of and went through a horrible experience, but a lot of your information is simply not correct. It may be your opinion of the situation, but it is not factual information.

Original Poster, I lost track of the various dates you were wanting to move and they were wanting you to move, etc. The bottom line, as has been correctly pointed out to you, is that the lease is valid up until the day foreclosure auction occurs and the bank sells the property to a 3rd party or buys it back themselves. At that point, not before, your landlord is in breach of your lease (unless the bank or new owner honored it, I guess) and you could sue them in court once you experience damages. If you attempt to leave prior to that the landlord could sue you for breaking the lease.

Now, will the landlord actually sue you... doubtful. They probably have a full plate right now. Would you ever see your deposit, last month's rent, etc. Doubtful. If you're breaking the lease you won't get it. And if the foreclosure goes through you may get a judgement for it, but I'd be shocked if you ever see a dime.

You are in a horrible position that more and more people are finding themselves in these days. And the sad fact is that until the government passes some laws protecting tenants in this situation, the tenants basically get screwed. (Can I say that on here?)

[ScottGem]

You are in a horrible position that more and more people are finding themselves in these days. And the sad fact is that until the government passes some laws protecting tenants in this situation, the tenants basically get screwed. (Can I say that on here?)

I wholeheartedly agree and what bothers me here is that the solution is extremely simple. The laws just need to be changed so that when a property with a rental lease is foreclosed on, the new owner has to honor the lease just as they would if they bought the property in a regular sale. The tenant is then protected from being forced out with little notice and they wouldn't have to worry about breaking the lease by moving early.

The new owner would have the option of buying out the lease if they wanted possession sooner. I was very surprised when I learned that the lease is voided in a foreclosure. Changing that seems to me to be the fairest way around to all parties.

[benzgirl13]

Both Chuck and Scott are wrong. If you are a tenant in a home that is in foreclosure and you have been served foreclosure papers you can refuse to pay rent. This is because in the foreclosure lawsuit, tenants are a party to the lawsuit as "unknown tenants". Once this happens, you can refuse to pay rent and continue to live in the house until the bank asks you to vacate the property or you work out paying the rent directly to the bank (if they want you to). Otherwise the bank can ask you to vacate, but that takes 30 days.

If you refuse to pay rent, you can write a check to yourself each month for the amount of the rent and note which month it is for. If the landlord tries to sue for eviction, you go to court and show the judge that you have been paying the rent, just not to him. Let the judge decide whether you should hand that money over to a landlord who is trying to collect rent while he is in foreclosure. I will guarantee you that the judge will find in your favor. Additionally, depending on what state you are in, the judge may suggest a civil case against your landlord for a "failure to disclose a material fact". That material fact is that the house is in foreclosure. This is especially true if the house was in foreclosure before you rented it. The failure to disclose that fact robbed you of your right to make an informed decision on whether to rent the house.

Good luck to everyone and don't let the landlords bully you into paying rent when you have the legal right to withhold that money. DO NOT listen to Chuck or Scott. They are giving horrible advice!!

[LisaB4657]

Both Chuck and Scott are wrong. If you are a tenant in a home that is in foreclosure and you have been served foreclosure papers you can refuse to pay rent. This is because in the foreclosure lawsuit, tenants are a party to the lawsuit as "unknown tenants". Once this happens, you can refuse to pay rent and continue to live in the house until the bank asks you to vacate the property or you work out paying the rent directly to the bank (if they want you to). Otherwise the bank can ask you to vacate, but that takes 30 days.

If you refuse to pay rent, you can write a check to yourself each month for the amount of the rent and note which month it is for. If the landlord tries to sue for eviction, you go to court and show the judge that you have been paying the rent, just not to him. Let the judge decide whether or not you should hand that money over to a landlord who is trying to collect rent while he is in foreclosure. I will guarantee you that the judge will find in your favor. Additionally, depending on what state you are in, the judge may suggest a civil case against your landlord for a "failure to disclose a material fact". That material fact is that the house is in foreclosure. This is especially true if the house was in foreclosure before you rented it. The failure to disclose that fact robbed you of your right to make an informed decision on whether or not to rent the house.

Good luck to everyone and don't let the landlords bully you into paying rent when you have the legal right to withhold that money. DO NOT listen to Chuck or Scott. They are giving horrible advice!!!

Please give us the legal source for your advice.

[ScottGem]

Both Chuck and Scott are wrong. If you are a tenant in a home that is in foreclosure and you have been served foreclosure papers you can refuse to pay rent.

Yes please cite a statute that supports your statements. As far as I know only CA has a law that deals with this situation. In all other states, as far as I know, the law is that as long as the landlord owns the property, the tenant must pay their rent.

This cite supports what we have said, at least for Illinois:
Illinois Legal Aid | What Happens If A Mortgage Foreclosure Case Is Filed Against My Landlord?

[Fr_Chuck]

Yes, sorry for the poor and incorrect advice on the one poster, but as previously noted, California is currently the only state offering protectoin for the renter in a foreclosed property, withholding rent just gets you evicted.

The issue is that until the home is actually sold in the eviction, the original owner still owns it, and holds all legal rights to it.
And next of course the renter is not really a party to the foreclosure, they are merely an interested party, since it will effect their rental status.

[Coryfsulaw]

I have a couple things to add.

1) Someone said that the leasing party is not a party to the lawsuit. I would assume that is incorrect. Other mortgagors on the property are considered parties that should be included, but do not have to be. Thus, it would make sense for anyone that has a legal interest in the property, including leaseholders, to be a possible party to the suit. I don't see why they would be added unless its for notifications sake, because there is not much a leaseholder can do about the foreclosure. Perhaps it is merely to get their names on the record as proper notice that their interest has been extinguished.

2) It makes no difference whether the Landlord is currently paying the mortgage. The landlord owns the property not for what he's currently doing, but for what he has previously done. That is why the law favors him in this scenario.

3) Its known as the "Warranty of Quiet Enjoyment" and its not breached until the property is taken from them. However, this seems like an anticipatory breach that a court may allow the lease to be broken over, depending on the details.

[ScottGem]

I have a couple things to add.

1) Someone said that the leasing party is not a party to the lawsuit. I would assume that is incorrect. Other mortgagors on the property are considered parties that should be included, but do not have to be. Thus, it would make sense for anyone that has a legal interest in the property, including leaseholders, to be a possible party to the suit. I don't see why they would be added unless its for notifications sake, because there is not much a leaseholder can do about the foreclosure. Perhaps it is merely to get their names on the record as proper notice that their interest has been extinguished.

A party to a lawsuit is either part of the defendants or the plaintiffs. These are the only ones who are a "party" to a lawsuit. There may be other people listed as interested parties because the results of the lawsuit will have some affect on them. Such people may be listed so they are kept in the loop for notification. But other than that they have no part of the lawsuit themselves. That would be the case of a leaseholder. A leaseholder has absolutely no say in a foreclosure. They have no right to be heard during the hearings (unless called as a witness for some reason). So they are not a "party" to the suit.

[ruiz_gerald]

Very informant