Foreclosure in Redding>Question Details

Karen, Other/Just Looking in Redding, CA

I'm a renter w/ a lease & the house is in foreclosure.What is the responsiblity of the property manager?

Asked by Karen, Redding, CA Thu Nov 8, 2007

I found out yesterday that the house I am renting is in foreclosure and there is a public auction in a few weeks. I signed a year's lease with a property management company at the end of August. The foreclosure started at the beginning of August. There is a chance we will have to move, is the property management company responsible for finding us a new house and the moving expenses?

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25
I asked our corporate Real Estate attorney this morning the question. Leases are void by foreclosure in California. The bank has no liability to the tenant in this situation. The agreement is between lessor and lessee and only transfers apon voluntary sale (residential real estate.) So getting your deposit back from the prop. management or landlord will be an issue between the two of you and you will likely have to go after them in small claims court if it is not returned...Again, consult with an attorney of your own for advice.
2 votes Thank Flag Link Tue Nov 13, 2007
The property management people are working with us to find us a house before the 27th. I think it will just be easiest to leave especially since they aren't holding our deposit. I found out that the property management company did not pay the owner the rent we sent them on Nov. 1st. I'm not sure if this will make things more complicated or not. I'm still not clear why they didn't send it to the owner. What a huge hassle moving a family right before the holidays!
1 vote Thank Flag Link Tue Nov 13, 2007
This is an excellent question and I am glad to see that it has been received well. You are not alone in this situation as may owners have secured deposits from tenants and collected rents without paying for the home themselves. Although nothing really prohibits this practice, it is a sad thing to see happening to tenants all over. I do not have the answer to your question yet, would like to ask for you to share experience through this difficult time so that the information you convey could be used to help others.
1 vote Thank Flag Link Mon Nov 12, 2007
I found out this morning that the owner of the house asked the property management company to place us in a new house. The house is going up for public auction on the 27th. When I asked the property management people about the deposit, the answer was very wishy washy. When I asked about moving expenses, she said she doesn't think the owner cares and she sounded like it wasn't at all the property management's responsibility. I contacted an attorney, they are going to call me back. I would hope to think the year lease I signed protected me too, that is what I am going to look into.
1 vote Thank Flag Link Fri Nov 9, 2007
Yes Ruth, Rebecca is clear on that. Where the issue lies, for our questioner, is after the Lease passes there could be a 60day vacate (eviction..such an ugly word) notice right along with it. My first post may be a bit short .., it supports what everyone here seems to think Karen should do. Gosh, I dislike the timing...Holidays and all. Unfortunate, how business has no tenderness to it. Get moving on this Karen! Good Luck.
1 vote Thank Flag Link Thu Nov 8, 2007
Yes Ruth. In a standard sale the lease is passed along to the next owner, however if the foreclosurer was already in process when the tenant signed the lease, that changes things...that is fraud. Banks are not in the buisness of being property owners or landlords. I would encourage Karen to start looking for a new place and she may have to sue in small claims to get her deposit and relocation back. As Ute said, often the bank will offer cash for key rather than go through the eviction process which is costly and time consuming.
1 vote Thank Flag Link Thu Nov 8, 2007
Hi Karen. That's an unfortunate situation and you should ask an attorney what your rights are. It's my understanding that the lender would have to honor your tenant rights, but I am really not sure about that. Many times lenders will offer cash for keys in exchange for you moving out.
Web Reference: http://www.theMLShub.com
1 vote Thank Flag Link Thu Nov 8, 2007
Ute Ferdig -…, Real Estate Pro in New Castle, DE
MVP'08
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I did contact the property manager and they were not aware of the foreclosure status of the property. I only found out the date of the foreclosure after there was notice of the public auction. The only things I would like are to get my deposit back in full, a place to live and moving expenses paid for. I'm not sure if the management company would be responsible for any of this. I never thought to ask about the foreclosure status of a property that I was renting through an agency... who would have known....
1 vote Thank Flag Link Thu Nov 8, 2007
That is a sticky one. If you signed a lease with someone knowing the property was in foreclosure, it may be fraud. You'll need to contact an attorney to be sure. Many foreclosure homes aren't selling at auction and the property ends up sitting around for a while. Are you still paying rent to the prop. management company? Have you as tenant received any notice from the lender? Generally after the property's title goes back to the bank, they begin the eviction process. I suggest first contacting the bank and then an attorney to find out what your rights are. Good luck.
1 vote Thank Flag Link Thu Nov 8, 2007
I would contact the Property Manager and ask them what there policy in writing is. 2ndly I would get ready to move as its gonna happen. The house is foreclosing which means the seller has no money. Who are you ultimatelly in contract with? If you are in with the seller or property manager. I would seriously converse briefly with an attorney in your recourse for getting your deposit back and the property management group not fulfliling there legally bound contract unless it has an escape clause with a foreclosure in the terms. Contact an attorney for sure !!!
0 votes Thank Flag Link Wed Jul 9, 2008
Karen,
Sorry to hear about the tight spot you're in. A lot of times if the company has more vacant rentals, they can put you into another home with little or no effort, especially given the circumstances. I know most the local property management companies in town, and if you have any problems don't hesitate to contact me. I'd be happy to help any way I can.
Web Reference: http://www.JohnnyRealty.com
0 votes Thank Flag Link Sun Dec 23, 2007
HI Karen-

While they might not have handled the situation very tactfully, that's pretty much normal procedure. We negotiate with the tenant, once an agreement has been reached, the bank sends over the paperwork and cuts a check. Then, on the agreed upon move out date, we go and meet the tenant at the house to make sure that they've moved all of their belongings and that the house is in 'broom clean' condition.

If everything goes according to plan, I release the check and call my locksmith to come out and change the locks and I start preparing it for market.

I know that it doesn't make the transition easy, but that's how it's done.

One thing that might help...In the past I've called the next landlord for the tenants to verify that I have a check in hand that I'll be releasing once they completely move out. Maybe they'll do the same for you.
Web Reference: http://myeastbayagent.com
0 votes Thank Flag Link Thu Dec 6, 2007
I am not sure if this site will help but, maybe a little swimming here wouldn't hurt

http://www.dre.cahwnet.gov/cons_home.html

Michael
http://www.MichaelRobertsHomes.com
0 votes Thank Flag Link Thu Dec 6, 2007
This is getting crazy! One minute we think we'll get the check another minute they are sending it to the realtor that is representing the bank. I found out that the realtor that is representing the bank is apparently friends with the rental agency that we rented the foreclosed house from. The rental agency is "dropping off" the check at the realtor's office and she will relinquish the check when we give her the keys. Does that seem fishy??? There was some confusion on when we would be done moving and when I clarified the date the realtor said "You should move out as soon as possible" Though we still have NOT received any written notice, when I mentioned that, the realtor replied "you don't want that kind of paper work following you around"...what is that suppose to mean?? I am trying really hard just to walk away and be the better person than all these people, but man it's hard. It's hard to suck up the 2k that we will end up spending on moving. I don't understand why they insist on trying to make this difficult. ---- breathing.... thanks for listening :)
0 votes Thank Flag Link Thu Dec 6, 2007
A happy ending! Good for you Karen.

Michael
http://www.MichaelRobertsHomes.com
0 votes Thank Flag Link Thu Dec 6, 2007
Hi Karen- Thanks for the update. I'm glad that things are going to work out for you.

On a similar note, we were just assigned another 4 REOs this week and when we went to go and visit the properties and talk to the owners/tenants, we found out that the owners of two of the buildings we're actively trying to collect December rent. Luckily, we were able to make contact with the tenants before the old owner did. phew!
Web Reference: http://myeastbayagent.com
0 votes Thank Flag Link Wed Dec 5, 2007
Another update..The foreclosed house we were renting went to public auction and ended up with the bank. I have found an awesome house to rent and we move in next week. I am really happy about that :) The bank realtor contacted us and since we found a place we just have to turn in the key. They aren't charging us rent for the month of December. I think she's just happy that the house isn't thrashed and that she doesn't have to do the paperwork for a 30 day notice. A few things I've learned in the last month from lawyers, people at foreclosure auctions, and small claims advisors: There are a whole set of rules that apply to foreclosures that are different than "regular" real-estate law. The law in California (for foreclosures) is that the new owners have to give us 30 days written notice to vacate the property. Leases are void if the house you are renting is auctioned off. The previous property manager has NO reason to hold your deposit if your rented house goes into foreclosure --- even if they want to keep it to buy Christmas presents. I've also found that there are A LOT of people who end up renting houses that are going through the foreclosure process. I never realized that someone else's bad financial decisions could actually have an impact on your life.
0 votes Thank Flag Link Wed Dec 5, 2007
Hi Karen, Not the update I was hoping for. You actually will get a 60 day notice to vacate if that is what it progresses to. I hope the attorney consultation will help you start a fire under somebody's desk, figuratively speaking.

Michael
http://www.MichaelRobertsHomes.com
0 votes Thank Flag Link Fri Nov 16, 2007
Just an update. I am still looking for a house to rent, the property management company has been very non responsive to my requests about getting things in writing. Verbally she says that we'll find a place before the 27th, though she has done nothing to make that happen. Yesterday she even had the audacity to say she's planning to keep 500 dollars of the deposit so we don't "trash" the place. I am a decent person. I would never do that. The house is going for public auction for heaven's sake! We have an appointment with a lawyer. Looking for other places. I know that we have 30 days after we get written notice. So far we don't even have that.
0 votes Thank Flag Link Fri Nov 16, 2007
Best of luck to you and I hope you will have a wonderful holiday despite the moving. I hope your new home will be an even better one and you'll be able to stay for as long as you desire.
0 votes Thank Flag Link Tue Nov 13, 2007
Hi Karen.

Another thing that you may want to consider. Once the property goes to auction, depending on who ultimately ends up with the property, the new owners often offer the existing tenants some cash to move out voluntarily.

From their perspective, it's easier to pay a little money upfront to get a property in good condition, rather than spend the money on an eviction and fight someone who will ultimately trash the place.
Web Reference: http://myeastbayagent.com
0 votes Thank Flag Link Sat Nov 10, 2007
See Karen, you have to ask if they are sure. Nothing is worst than asking the same question and getting several different answers.

Thank you Rebecca and Michael. I was going to ask you even before Ute made her statement.
Ruth
0 votes Thank Flag Link Thu Nov 8, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
UTE: THANK YOU!!!
Rebecca and Michael, are you sure?!! I know Calif and IL are very different when it comes to real estate. In IL if a renter has a lease, the new owner has to honor the lease and long as the tenant has continued to pay the rent. The tenant would be given notice as to where to send the mortgage payment.

Karen:
You say, "There is a chance we will have to move." Is that because of YOUR choice such as a job change or is that because you think when the house is foreclosed you won't be able to live there anymore? If you don't WANT to move, I wouldn't worry to much. IF the property is foreclosed, the new owner would probably want to keep you in there.
Good luck,
Ruth
0 votes Thank Flag Link Thu Nov 8, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
Now based upon what you've stated, I'd say that you should one: contact the property management company(which has been stated) and two contact an attorney (which has also been stated). Make sure you have a paper Trail( receipts of payment for rent, lease agreement etc.). This paper trail will allow for you to actually show that fraud had been committed if it comes to that. Best of luck and contact an attorney ASAP.
0 votes Thank Flag Link Thu Nov 8, 2007
Rebecca covers the subject pretty well. There are some questions though. Have you contacted the Management Co.? Rebecca clearly identifies some rocky circumstances. I agree an attorney could be necessary yet, If you can get your deposit back.. simply move on to a new place without all the excess issues.

Of course, your management co. will have documentation as to the disclosures made to them from the current owner, if you want to go in that direction. Unfortunately, this could all become more trouble than it is worth. I'ts simply a matter of principal beyond your deposit ,as the legal system is so slow in these matters. Get that free consultation first and be prepared provide every piece of documentation you have at that time. You will have a better chance of understanding what you are against. I want to emphasize..your deposit is most important!

Michael
http://www.MichaelRobertsHomes.com
0 votes Thank Flag Link Thu Nov 8, 2007
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