Saturday, March 19, 2011

If A Property Is In Foreclosure Do You Still Have To Pay The Rent?

for rentImage by hownowdesign via FlickrThe common opinion when a rental property is in foreclosure is that you don't have to pay your rent. You may claim that the owner is going to lose the property so whats the harm in not paying. You have been receiving mail from the mortgage holder about the looming foreclosure and your afraid of what will happen. Do not worry you will have 30 days to move if it comes to that.

Not knowing what to do do in a situation is normal. Getting the facts will allow you to make the right decision. When you have a rental agreement you are promising to pay rent according to the details of the lease. A lease is a legal document that states how each party will perform. Just deciding to stop paying rent is in violation of the lease and you are legally liable to pay. You can be sued for the back rent and may even have to pay the landlords legal fees in pursuing the matter.

Paying your rent is the right and moral thing to do. Not paying, is taking advantage of the situation. The landlord in foreclosure has their hands full and may not pursue you for the rent, but it still is wrong not to pay.

If the property does go into foreclosure and later is settled by the owner. You have to catch up on the rent to stay in the rental. If the poperty is foreclosed and later sold to a new owner; the new owner has all contractual rights and responsibilities that were contained in the lease or, if the lease had run out, in the month-to-month rental agreement (with the same lease terms) that legally kicks in when tenants stay on with permission after the end of a lease.

So, for example, as the old owner had the right to receive rent on the first of the month, you, too, can expect the same. The former owner also had the right to demand back rent, by delivering a "pay or quit" notice. Most owners send these notices after one or, at most two, missed rent payments. With bank-owned properties these days, there's no telling how much (or more likely, how little) attention is being paid to the property. But even though a demand for 18 months of unpaid rent is unusual, it's still a right that you obtained when you took over as the owner.

You'll need to check your state law to see how much rent you can demand in a "pay or quit" notice. If you are limited and want to collect the balance, you'll need to go to small-claims court.

If in this situation, work out something with your landlord. If you don't trust your landlord why not pay in the rears. Pay at the end of the current month. You will feel your not getting taken and the landlord still gets their money. It may not be to the letter of the lease, but at least you are paying.

Reader: Have you had some experiences with living in a rental thats been in foreclosure?



No comments:

Post a Comment

Join 1000's of People Following 50 Plus Finance
Real Time Web Analytics