My wife and I currently life in Orlando, FL and we are renting a condo conversion. We have been renting the place since Aug 06, with a lease set up between us and the private owner. We recently signed a new lease (as our old one expired) in August. Things seemed to be going ok.
2 weeks ago both my wife and I got a summons, that let us know that our landlord was being sued by the bank he financed the house through, for not paying his mortgage since July of this year…
Now I’m a younger guy and haven’t had much experience with matters such as this, I didn’t know what to do, not to mention well stressed over the matter.
I was frantically asking advice from anyone and everyone I knew. Some said keep paying your rent and just make sure there is a paper trail, others stated don’t pay it and save the rent money for the eventual move(if the house gets foreclosed they usually kick you out, or so I’m told, and its usually really really short notice, 24hours).
Eventually I spoke to a lawyer, mind you his specialty wasn’t in this area of law, but his suggestion was not to pay the rent and save it for the move.
So we didn’t pay rent and so far the landlord has not contacted us. My question is was this the right move to make and what are my obligations/risks in a situation such as this (specifically being a renter who’s home is potentially getting foreclosed)?
-Eric
After the foreclosure happens, then in most states the lease is broken, meaning you have no obligation to keep paying rent and the landlord, now the bank, has no obligation to let you stay there
If you paid a security deposit, you’re still entitled to get that back from the landlord.
Keep saving for the move, which will probably take first and last month’s rent and a security deposit. Consider pre-packing up your non-essential items. Assuming your landlord doesn’t discover a secret box full of gold coins and pays off his mortgage, you’re going to have 24-72 hours from the inevitable eviction notice to get out of Dodge.
You really need to get familiar with Florida state laws for this, though. Consider contacting your local bar association and asking for a referral to a lawyer specializing in tenant rights.
RELATED:
href=”http://www.bankrate.com/brm/news/real-estate/20071109_foreclosure_eviction_renters_a1.asp#one”>Foreclosure can leave renters homeless [Bankrate]
As Owners Feel Mortgage Pain, So Do Renters [NYT]
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So this happened to my family and me just this year.
Signed a lease and the owner of the condo foreclosed on the property. The property management company, who was the middleman as we have never met the owner, gave us our full security deposit back and we have not had to pay rent for the past three months. We bought a house and the payments on it are less than what we paid in rent.
Depends entirely on the state. Generally, the rule is a foreclosure cannot terminate the rights of the tenant or modify the lease. A foreclosure transfers the title back to the bank, in most cases it cannot change the lease itself i.e. the bank is now considered the landlord. Therefore, unless the original landlord could have broken the lease, generally the bank cannot either and are required to give the same notice etc… as the original lease called for.
I practice law in Georgia, and am not entirely sure this holds true for Florida. My advice is to place the back rent and current rent into an ESCROW account monthly to indicate ability and willingness to pay and good faith. Then contact a competent real estate attorney to research the situation and work out a deal with the bank. Remember, though, that as long as you keep “paying” rent (generally setting it aside in escrow is enough when the person to be paid is indeterminate), the new owner cannot generally terminate the lease except for cause or with appropriate notice. So if you like the place, get on it, otherwise start packing and get outta dodge
.
@Buran: Being picky here: Most money judgments ARE dischargable in bankruptcy. The few exceptions include judgments for money obtained by fraud. Must use “magic words” to get a fraud judgment.
@Pylon83:
The ownership is in dispute because the mortgage company says it has the rights to the property and the landlord says he has the rights to the property. So the mortgage company is suing the landlord. (foreclosure) So maybe I should have used the term “who has rights to the property” instead of ownership.
And from what we saw from a week ago the mortgage company may not own the property either.
@trollkiller:
I disagree. It is clear that the landlord owns the property until the court decides otherwise. The simple fact that they are being sued for foreclosure does not change who owns the property until a judgment is entered granting title to the mortgage holder. Withholding rent or diverting it to a third party may open up a whole different can of worms.
@Pylon83:
I disagree about the “who has the property rights” issue, so let’s move on to the can of worms.
The OP said he was summoned, I am not sure why unless it is so he can be informed of his rights and obligations as a renter in this matter. If he places the money in an escrow account like the attorney from Ga. suggests and asks the judge who gets the money, he is off the hook. He is not trying to deprive the rightful party of the funds, he just does not know who the rightful party is.
The landlord has failed to contact him for the rent, and the mortgage company has failed to contact him for the rent. Like I said earlier we don’t know if the landlord has already turned over the property and walked away. The landlord may not be entitled to the money.
What happens if the landlord is not entitled to the money but he pays him anyhow? The OP could be on the hook with the mortgage company for the rent he has already paid to the landlord.
Doing it my way the worst that can happen is the OP is liable for late fees. Something I feel he could successfully argue that due to the lack of communication between the landlord and him he was unable to determine the rightful party to pay. When and if a judge says “you owe this person the rent” the OP will have it at the ready.
In any case until the landlord gives the tenant a demand for rent the OP has a roof over his head.
[www.800helpfla.com]
Non-Payment of Rent
Section 83.56(3), F.S.
The landlord must serve you, the tenant, a written notice allowing three days (excluding weekends and legal holidays) for you to pay the rent or move from the premises. If you do not pay the rent or move, he/she may begin legal action to evict you.
@trollkiller:
See, you are arguing facts not in evidence. You don’t know what the summons was for, the OP didn’t state it. You are assuming it even says anything about disputed ownership. The tenant does not get to arbitrarily stop paying rent because he got unconfirmed information from a 3rd party that indicate the LL might be under foreclosure. What if I sent him a personal letter saying the LL was being foreclosed on? Any different? The summons is nothing more than a “You/this person is being sued. Show up in court”. It is not grounds to stop paying rent. Until he is officially informed that there is a new owner, he is fully obligated to contiue to pay the current landlord.
Now that I think about it, the summons is likely a joint foreclosure/forcible entry and detainer action against the property owner and all occupants. The bank was able to ascertain who lived there, and served them. With that in mind, they certainly should not ignore the summons, and showing up to court sans attorney would be a bad idea, and a good way to find themselves on the street faster than anticipated.
With regard to “being on the hook to the bank for rent already paid”, there is no way this would happen. If the bank never notified them that they were the new owners, they would have no recourse if the tenant can show he paid the original LL the rent.
Basically what I’m saying is that it is simply not a good idea to stop paying rent because you don’t know whats going on. Until official word is received from the LL, the new owner, or the court in the form of a judgment, the tenant has no business to arbitrarily stop paying.
Maybe you missed where I dropped the disputed ownership argument in my previous post. I see it as being in dispute because it is going to court. If it was not in dispute there would be no need to go to court. With that said I am not going to argue that point anymore.
Why is it not a good idea for the OP to stop paying rent?
If his move in was typical of Florida move ins, he had to pony up first, last and security. Yes I am making an assumption. Converted condo in Orlando would rent for $800+ a month. That leaves the landlord sitting at this moment with $1600 of the OP’s money.
What do you think the odds are of him getting that money back from the landlord? The landlord has already in my mind been fraudulant by not paying the mortgage when the rent was being paid. Do you think the landlord is going to refund the $1600?
If he follows my suggestion he has that money on hand if the landlord demands it. I don’t think that will happen as it seemed the landlord has walked away from it. How many landlords do you know that would not have contacted you for 2 week overdue rent?
If the landlord does not demand it (and I would make him take me to court) the OP regains part or all of the $1600 that is still rightfully his.
The OP can use that money to move and get on with his life.
My wife and I live in Orlando and we faced the same situation in 2006, with one difference. The owner hired a realtor who also specialized in property management. So, we had immediate recourse (the realtor relocated us to a better house in a better neighborhood;>).
In this case, I would advise the OP to bank all of his rent payments in an escrow account. At this point in time, the landlord is still the owner but only a fool would still pay him. By banking his rent he will have access to it if he needs to broker a deal with the new landlord once a judgement has been rendered in the foreclosure or if he should decide to move.
@Pylon83: i was going to say…all these suggestions for trying to recoup the security deposit can’t merit any worth as he’s stopped paying his rent!
besides, several months of not paying rent surely must have outweighed the loss of a security deposit being returned, unless they payed an outrageous deposit like 6 months =P
you can’t have your cake and eat it too =P
You know this is not right the same thing is now happening too me and my wife right now. We have been in the place for about 4Months now . Not knowing this place was in forecloser 2 1/2 befor we moved in and the owner know that it was. And how we found out it one day we where on our way on when we meet this guy in the parking lot and he had some pappers in his hand ..We ask who where he was looking for and said the that he his a SUMMONS…..AND YES IT WAS FOR ME AND MY WIFE..So I need some help with this..What should we do…And P.S Should we still pay our owner
All,
I am going through this in Long Island New York. I signed a year lease on a house and found out first by opening the wrong statement(my landlord has the same bank as I do for his mortgage) and found that he was being warned for foreclosure. I disregarded that at first until someone came here to serve him with papers to apppear in court. The guy gave my wife a copy. I am still unsure as to what to do I am leaning towards putting the rent in escrow and see what happens. The prick hasnt paid his mortgage since July and when I told him I got papers he put on this Oscar winning act that there must be some mistake and he would call me back after he talks to his bank..this is a week ago.
I would like to buy this house but I have been told its best to wait until foreclosure before trying to buy it ..any suggestions? Also can he successfully ruin my credit if I don’t pay him and would I be able to dispute that with proof that he hasn’t paid his mortgage in over 6 months?
Just my two cents worth. I live in Texas and my deadbeat owner lives in Arizona. The house I signed a 2 year lease on was foreclosed on in January 2010, we moved in July 2009. We went four months without paying rent until Fannie Mae took over and hired a Property Management Company to take over. I sent demand letters to both the deadbeat landlord as well as the Property Management Company hired only to rent the property. We got lucky, I just got my Security and Pet deposit back, not all that I was asking for but I at least got $1645.00 back from him. Beggars can’t be choosers in this situation, so it is possible to get it back. We were planning on suing in small claims which is difficult when you live in two different states. I will be more cautious next time. Renters beware!
I live in Illinois and had a process server come to my home on 07/14. I should have expected this as we have had about 5-6 servers come to serve my LL for other properties he was forclosing on (he was a partner in a Real Estate Investment Group). I am at a loss, I really need my security deposit back to move. My lease is up 07/11 and will not have a security deposit until March? Any suggestions?