Rental Basics in 85713>Question Details

Petunia5, Renter in 85713

Our Landlord admittedly isn't paying the mortgage on the home we rent from him. 2times now we have received a manila envelope. Foreclosure?

Asked by Petunia5, 85713 Fri Jan 28, 2011

How do we know or find out if we should expect to move. As well, what protections are there financially for us? Our deposit will or will not be paid back?

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14
I do not agree with Jim McCowan's answer. Tenants have protection in the event of a foreclosure under the US Goventment's Helping Famlies Save Their Homes Act. For a good article on the Act, go here: http://tenantstogether.org/article.php?id=723
2 votes Thank Flag Link Fri Jan 28, 2011
Yes Mr Mcgowen is wrong, wrong, wrong. Tenants have rights, even in forclosure. The problem is rights are expensive to enforce in any venue. The landlord also has rights. Even if the property is in forclosure, you are still obligated under the terms of most leases to pay your rent. Your best bet is to go to the county recorder, look up your address and see what is recorded. If forclosure is started, your property will be notified by certified mail and by notice on the door, and by recording at the county recorder. This info can be found on their website for a small fee.. Even if the property is in forclosure, the owner may be working on any number of things to resolve that would create no damage to you. The worst thing you can do is walk away from your lease because of speculation.
0 votes Thank Flag Link Wed Mar 21, 2012
Tenants do have rights as Mr. Pollman stated. Contact the Attorney General's office to obtain what is legally protected by law. If a foreclosure is on the horizon you will likely be apprised but without much notice. Most bank owned properties will honor the lease if they become the property owner. They may offer 'cash for keys' to the tenant who is willing to break the lease early to vacate the premises. This would likely be in lieu of the deposit but it is hard to predict as it will likely be based on a case by case scenario. At any rate; none of us here can adequately answer your question as we will not likely be directly involved. Therefore, the suggestion to consult an attorney is also a good idea. You now have an array of local real estate agents who are willing to assist you in finding a housing alternative if/when that becomes a necessity for you.
0 votes Thank Flag Link Sun Mar 11, 2012
To know exactly what your rights are you would need to contact an Arizona real estate attorney. Since your landlord has already informed you that he isn't paying the mortgage, I would recommend that you start looking for a new place to live as soon as possible! If you need assistance finding a home to buy or rent, please don't hesitate to contact me.

Eseosa Elaiho
Keller Williams Southern Arizona
520-979-0531
0 votes Thank Flag Link Sun Feb 6, 2011
Your first recourse is to ask the person you are leasing from. You could ask for verification that the mortage is being paid. Ideally, all payments would be made to an escrow comapny. It is more expensive but avoids certain risks. Look at your lease and see what the provisions are, when it terminates, advance notice etc. If the bank does take the house, they may offer you "cash for keys" if you have a valid lease. This allows you time and money to find a new place to live. First talk to the owner and see what the situation is. Also, foreclosure notices are public record and can be viewed at the county recorder's office if it has been recorded. Hope this helps and good luck.
0 votes Thank Flag Link Sat Jan 29, 2011
Whenever you lease/rent a home in these times, I suggest you interview the owner and ask if there is a mortgage on the property. If so, you can request to make your payment to an escrow company, and they make the payments to the bank. I always setup this service when I am putting a lease/purchase in place, where the person renting is also buying, and as a good agent, I want to protect my client...
You as a renter can do the same, any title company can setup servicing for you... cost is $150 initial setup fee, and usually $15/mo to collect payments and send checks to the bank.

Jeremy Dixon
Associate Broker with Tierra Antigua Realty, Tucson AZ
0 votes Thank Flag Link Fri Jan 28, 2011
Hi Petunia5

After the property forecloses the Bank will give you sufficient notice.

http://www.trulia.com/blog/perry_mistry/2011/01/tenants_righ…


Good luck.
Perry
0 votes Thank Flag Link Fri Jan 28, 2011
An exception was carved out for the buyer who intends to live on the property -- this buyer may terminate a lease with 90 days' notice. Importantly, the law provides that any state legislation that is more generous to tenants will not be preempted by the federal law. These protections apply to Section 8 tenants, too.

Importantly, tenants who live in cities with rent control "just cause" eviction protection are also protected from terminations at the hands of an acquiring bank or new owner. These tenants can rely on their ordinance's list of allowable, or "just causes," for termination. Because a change of ownership, without more, does not justify a termination, the fact that the change occurred through foreclosure will not justify a termination.
Does It Make Sense to Evict Tenants?

New owners may want to terminate existing tenants because they believe that vacant properties are easier to sell. Common sense suggests otherwise. In many situations a building full of stable, rent-paying tenants will be more valuable (and command a higher price) than an empty building. Emptied buildings are also prone to vandalism and other deterioration -- after all, no one is on site to monitor their condition. When entire neighborhoods become a wasteland of empty foreclosed multifamily buildings, their value drops even further. It's hard to understand why new owners choose to pay lawyers to start eviction procedures instead of paying a modest fee to a management company to collect rent and manage the property while they wait to sell.
"Cash for Keys"

To encourage tenants to leave quickly and save on the court costs associated with an eviction, banks offer tenants a cash payout in exchange for their rapid departure. Thinking that they have little choice, many tenants -- even Section 8, protected tenants -- take the deal. It doesn't help them much as they join the swelling ranks of newly displaced tenants (and former homeowners) who are competing to find an affordable new rental.
What Can a Foreclosed-Upon Tenant Do?

Thanks to the 2009 federal legislation, most tenants with leases will keep their leases, and month-to-month tenants will have at least 90 days to relocate. Tenants with leases have no legal recourse against their former landlords, because they are in the same position vis a vis the new owner as they were with the old: The lease survives and ends as it would had there been no foreclosure. Similarly, month-to-month tenants always know that they can be terminated with proper notice, and 90 days is longer than any state's termination period.

However, a lease-holding tenant whose rental has been bought by a buyer who wants to move in to the property ends up less fortunate than before the foreclosure -- he may lose his lease with 90 days' notice, a result that probably would not have happened had the owner simply sold the property to a buyer who intended to occupy the property. (Normally, the new owner has to wait until the lease ends, absent a lease clause providing for termination upon sale, though such clauses may not be legal in all situations.)
Suing in Small Claims Court

A lease-holding tenant who has to move out so that new owners may move in might consider suing their former landlord in small claims court. Here's how it works.

After signing a lease, the landlord is legally bound to deliver the rental for the entire lease term. In legalese, this duty is known as the "covenant of quiet enjoyment." A landlord who defaults on a mortgage, which sets in motion the loss of the lease, violates this covenant, and the tenant can sue for the damages it causes.

Small claims court is a perfect place to bring such a lawsuit. The tenant can sue the original landlord for moving and apartment-searching costs, application fees, and the difference, if any, between the new rent for a comparable rental and the rent under the old lease. Though the former owner is probably not flush with money, the awards in these cases won't be very much, and the court judgment and award will stay on the books for many years. A persistent tenant can probably collect what's owed eventually.

You can make an offer on the house as well
0 votes Thank Flag Link Fri Jan 28, 2011
Wow, you've got some great answers here! Your best bet is to talk to a Real Estate Lawyer because there are some conflicting anwsers here, you can also go get yourself a copy of the AZ. Residential Tenant Landlord Act. Go to http://www.azsos.gov/public_services/publications/residentia… and download a copy. The current owner is supposed to turn over any and all deposits to the new owner. Check section 33-1321, 33-1330 and 33-1370. Generally speaking, some Real Estate Leases will survive a sale for instance if I sell my shopping center the current tenant's leases will remain in force. If your landlord refuses to give you your refundable deposits back and you have a "written" lease you can take them to small calims court. It costs about $38 to file and the Judge will make a decision that is binding. Good Luck!
0 votes Thank Flag Link Fri Jan 28, 2011
Petunia 5,
Other answers (except one) give you good basic information. For practical purposes you will have up to 3 months warning. Review wording on your rent/lease contract. Provided your payments are up-to-date foreclosing organization has to honor the terms. If new owner wants to move in, he has to give you 3 month notice. If new owner is investor and is not moving in, he has to honor terms of the contract (as written). To be absolutely certain you can contact Lawyer Referral Service at (520)623-4625 – (service of Pima County Bar Association). For a non-refundable fee of $35 (due at the time of the referral), the Lawyer Referral Service will provide you with a licensed attorney who will provide you with a 30-minute consultation. That should be enough time to answer your question.
Good luck
George in Tucson
Extra benefit for Buyers (limited time offer – contact George for details);
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0 votes Thank Flag Link Fri Jan 28, 2011
Could be, depends on what you have in the envelope. You do have tenants rights, however if the house is being foreclosed upon...seek legal advice, speak with a local Real Estate Attorney to see where you stand. The good news is at least you are renting and it is not your house.

If you need help finding a house in Tucson, please click on my profile and give me call. Happy to go over your options.
Best of Luck.
Spirit Messingham
Tierra Antigua Realty
Tucson, AZ
0 votes Thank Flag Link Fri Jan 28, 2011
A Notice of Trustee sale is supposed to be taped the front door 90 days prior to the sale (foreclosure). Then you will be contacted by the bank's rep, often they offer "cash for keys". You can go to the county recorders office to see if anything is recorded yet...
0 votes Thank Flag Link Fri Jan 28, 2011
Dear Petunia:

Most likely your lease contract will be honored by the owner's bank if there is a foreclosure. The wording on your lease contract will need to be reviewed. Check with the Arizona Tenants Bill of Rights "Handbook" for more information under the link at: http://www.arizonahomesland.com/forbuyersorrenters.html If you not sure, you may want to contact your attorney.

Some banks may even offer "Cash For Keys" at the time of a Foreclosure if they wish to put the home back on the market and not be the landlord until the end of the lease term.

The good news? It is often less expensive to buy in the current market than to rent.

May I wish you the best.

Jeff Masich
Arizona Homes and Land
HomeSmart Realty
Web Reference: http://ArizonaHomesLand.com
0 votes Thank Flag Link Fri Jan 28, 2011
Tenants don't have any rights when it comes to foreclosure. If it happens, you're out of luck. If the owner isn't being totally upfront with you, you might want to start looking for another place.
0 votes Thank Flag Link Fri Jan 28, 2011
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