Rentals in Schaumburg>Question Details

Abigail Buss…, Home Buyer in Oak Park, IL

Who are you paying rent to when a condo is in "pre-foreclosure"?

Asked by Abigail Bussard, Oak Park, IL Fri Sep 7, 2012

I am interested in a condo that is listed with an agent - however it's described as a "month to month" lease due to it being in pre-foreclosure. They require a credit check, and a security deposit. I am leery of giving a security deposit to an owner not paying his mortgage, and assumedly behind on his bills. Since this condo was basically "abandoned" by the owner - would I be paying the owner the rent, or is the homeowners association/mgmt company in charge of the unit now? Thanks!

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This seems to be a legal matter and as always - please consult an attorney specializing in real estate matters. From my point if view - as long as your landlord is on the deed to this property, he has the legal claim to the rent it yields. In the absence of a legal action from your side, you should be fulfilling all your tenant's obligations.
0 votes Thank Flag Link Sat Sep 8, 2012
One other thing, just pay attention to answers from people in IL as they pertain to OUR state.

Lyn Sims
RE/MAX Suburban (847)230-7324
Web Reference: http://www.LynSims.net
0 votes Thank Flag Link Fri Sep 7, 2012
One of the more interesting questions I've seen here. I would say that you are correct to be cautious with your security deposit & rent money. There are 2 sets of circumstances here:

1) If the owner still has 'control' of the property, you would be paying the owner but then you never really have any control over whether he is paying his mortgage. Most tenants get this surprise when the sheriff is serving you papers that foreclosure has been initiated. In that point, your lease is still valid & would be honored.
2) Assn has taken over property for back association dues which is happening more & more since owners are not paying & the association is loosing money hand over fist. Don't forget that in some condos the gas is included in the fee & must be paid even if the owner isn't paying it. Puts alot of stress on the finances of the association. But back to the point - you make the rent to the association directly & you have a month to month lease with the association. Not a very secure lease if you ask me as they can ask you to move quickly. Good for someone looking for a short stay only.

Good luck to you & you are correct to be careful & knowledgeable!

Lyn Sims
RE/MAX Suburban (847)230-7324
0 votes Thank Flag Link Fri Sep 7, 2012
0 votes Thank Flag Link Fri Sep 7, 2012
You would pay who ever you sign the lease with. If it is a month-to-month it may have been taken over by a condo association. I would be very careful with your security deposit, like you stated, they seem to disapear in these situations. The owner is probably not going to fix a whole lot if something breaks.

Here's a link to 63 rental properties in Schaumburg feel free to visit it, it might help you on your search.

Good Luck,

John
0 votes Thank Flag Link Fri Sep 7, 2012
Thanks for the responses. So, a month to month lease - with the monthly rent paid to someone who A. isn't paying the mortgage and will soon lose the house, and B. a security deposit intended to cover any damages - held by someone who will soon lose the house, and therefore not care about the damages.

Additionally, how motivated is someone who is going to ultimately lose the home - be willing to spend money to repair anything that goes wrong while I'm living in it?

Thanks, but no thanks - it should be illegal for people not paying their debts to be able to "rent" out a property they do not own. The "owner" does not truly "own" the property - the bank does until the mortgage is paid in full, in my opinion.
0 votes Thank Flag Link Fri Sep 7, 2012
You're a smart cookie, Ally! Don's advice to have a 3rd party hold your security deposit is great. And your comment about an owner not being motivated to make repairs because they're on the road to losing the property any way is right on. There IS something wrong that an owner can collect rent, pocket the money and not pay the mortgage.

If you need help finding a place to live, give me a call. I'd love to help you find a good place.
Flag Fri Sep 7, 2012
You pay the rent to the owner. In a pre-foreclosure, that's the owner who's being foreclosed upon.

Your concern is legitimate about giving a security deposit to an owner who is in financial distress. I'm not a lawyer, so this isn't legal advice. But you might be better protected by having the security deposit held by a third party--perhaps put into an escrow account managed by a third party. I certainly would not give the security deposit directly to the person in financial distress.

Check with a lawyer for more information.

Hope that helps.
0 votes Thank Flag Link Fri Sep 7, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
As with any rental you pay rent to who ever the owner tells you to. Normally it is the owner and what they do with the money is none of your business. They are offering the rental as a month to month because they fear it might go to the foreclosure auction and be bought by the bank in which case the lease would be worthless, so they are being honest with you.
0 votes Thank Flag Link Fri Sep 7, 2012
Thanks for the reply. While you are correct that what they do with the monthly rent is none of my business, i.e. pay their mortgage as agreed, or spend it on a new HDTV...........what they do with my refundable security deposit "is". I have no problem with a month to month lease, paying the rent on the 1st of every month upfront, or a credit check..........but I do have a slight problem with someone who obviously cannot manage their money "holding" on to mine. Especially when the asset that they intend the security deposit to repair - will soon not even be theirs anymore....
Flag Fri Sep 7, 2012
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