[hntrdog]

I currently rent a home. My lease was up in August and while I re-negotiated the monthly payment the owner never sent me a new lease to sign. I came home today to find a "For Sale/Short Sale" sign on the front lawn and a lock box on the door. I contacted the realtor who was surprised that the owner never contacted any of the tenants. He owns approx 40 properties in town. I made it clear that they were not to enter my home without my permission and that the alarm would always be set. She told me no problem. She also stated he was in foreclosure and working with the bank for a short sale. At that time I said something to the affect of "great he has been pocketing my rent payments". She said no she was sure he was paying the bank. At that time I said he wouldn't be in foreclosure if he was paying the bank since proceedings would not have started unless he was at least 90 days in arrears and in this current climate he is probably a lot more than that. She again said she felt he was sending the "something".
My question is, if he is in foreclosure do I still have to continue paying rent?? I am going to be discussing qualifying to actually buy this home once the comps come in and the rock bottom price is set. In the meantime I need to know where I stand. I know the lease is null and void and I will never see my deposit but what about continuing to pay rent?
I found it suspicious that the owner waited until a week after rent was due to put the signs up on the lawns. He made sure he got one more months rent from everyone as I am sure there are some who will no longer pay. I don't want to jeopardize myself in any way, I just want to know what my options are.

[Fr_Chuck]

Unless you are in California, yes of course you keep paying rent, if you are living in the home, that is your legal obligation, and again, unless you live in California, the fact the house is in foreclosure does not even have to notify you.

And if you don't pay your rent, they can evict you and rent it to someone else.

Also depends on where you live, they have to give you a 24 hour notice that they will enter your home, they do not have to make sure you are there, merely notify you they are going to be coming in. In fact most realitors do not want you there when they show the property.

[rockinmommy]

FrChuck's answer is accurate, as usual.

I would add a couple of things.

Your lease is NOT null and void. The owner is still the owner until the property sells or the bank officially takes it back. So your contract with him is still in effect. Just because you haven't signed a new one doesn't mean the old one is dead. Almost all leases state that they automatically convert to month-to-month once the initial term is over.

Second, I'm not sure who is helping you with the short sale, but I wouldn't "wait" for much to happen before you try to start negotiating with the bank. Different banks handle these sales differently, but they rarely set a rock bottom price. By the time they do that some savvy investor will have come along and swooped it up. I think it's an excellent plan to try to buy it. Are you already approved? If so, start low and start making offers. Like I said, all the lenders handle things differently, but they can act strangely in short sale situations. Some realtor's offers seem to get preference. I just wouldn't wait is what I'm saying.l

[Fr_Chuck]

And to add, most short sale offers will be by the lenders rules, most of the rules limit the commission the sales agents (brokers) can receive, so often not all real estate agents will work very hard for a short sale, since their money is often cut greatly from a regular sale.

[froggy7]

And be aware that in a short sale, you may very well have to agree to pay off any liens against the house as part of the conditions. The seller's not going to want to pay them, and the bank isn't going to want to eat the loss. So just about everything is going to be negotiated.