Foreclosure in Los Angeles>Question Details

We2, Home Buyer in Los Angeles, CA

Lease the property month to month while in a short sale?

Asked by We2, Los Angeles, CA Thu Mar 26, 2009

We are the only accepted offer with Countrywide. The owner of the house cannot afford the upkeep any more and has approached us to lease the home while we are waiting.

1. We would stipulate in our agreement that the owner cannot accept any other offers or try to loan modify while we are waiting for the response. An appraisal was done last week. Do we have the right to ask this and can the owner agree to not taking any more offers or loan modify until we get a response from Countrywide? The owner does not have the property on the MLS anymore and is not showing the property. We think they did this as they tried to loan modify while we thought we we thought we were in short sale.

2. Are there any suggestions as to what we should state in the lease agreement to protect ourselves. It has been confirmed that we are in the short sale department.

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Answers

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I would also like to add:
Do you know for a fact that the bank's short sale department is in sync with the bank's foreclosure department? I haven't seen this happening once, not a single time. I wouldn't count on the bank not foreclosing because there is a short sale offer on the table.
0 votes Thank Flag Link Fri Jun 18, 2010
I'm in Florida and statelaws may vary but I would not ever and under no circumstance advise my seller to not entertain back up offers. Why? Because you might just get tired of waiting for Countrywide to approve the sale. You might just walk away from the transaction because you found another home you like better. There is no guarantee for my seller that you will go through with the transaction. We see short sale buyers walk away all the time. We put our short sales in the MLS as contingent after an accepted offer on a short sale but we will not stop showing the property and we will advise our sellers to not ever give such a concession to the buyer with the contingent offer.
0 votes Thank Flag Link Fri Jun 18, 2010
We2,
The laws that protect tenants against an owner who doesn't apply rent towards the mortgage first are the rent skimming laws. Start at http://www.leginfo.ca.gov and look up civil code 890.
To answer your other question, yes a seller can decide not to accept any other offers and take the home off the market so the bank only reviews your offer. Why would they do this and risk your offer not being accepted and then they have to scramble for another offer. Your offer would have to be really strong for me to tell my clients not to look at other offers. I have to agree w/ Dyanna and advise you not to lease this property because you'll just be throwing your money away. Allow for the lender to find out the property is vacant and they'll speed up the process so that they can get rid of this property.
0 votes Thank Flag Link Thu Mar 26, 2009
We2 why do you want to pay rent on a property that is going in to foreclosure? What if the bank does not accept the short sale? What if the seller changes his mind? A piece of paper is not going to stop those actions. I am shocked that your agent is even considering doing this. I am shocked that you would want to give someone money when they aren't making the payments on this house. Do you understand that you are GIVING away your money. The bank would NEVER allow the property to be rented due to severe legal issues, you would be considered a tenant. This is a horrible idea and I am hoping you don't go through with it. I am saying this because you need to be protected and I am looking out for your best interests.

Good Luck,
Dyanna
0 votes Thank Flag Link Thu Mar 26, 2009
Mario please can you let me know which law states that the owner cannot take rent money from us and not pay the bank his mortgage.

Please can you also answer the question - can the seller decide not take any other additional offers or accept any other additonal offers?

Alexendra - I thought that while there is a short sale in process Countrywide wont forclose on the property. It costs them a great deal of money to foreclose.
0 votes Thank Flag Link Thu Mar 26, 2009
Be careful because there is a lot of fraud going on with the owners that are loosing their home. First of all the seller can not guarantee you that the bank will not foreclose on the property. Talk to an attorney to get legal advise, in terms of what can and can not be done.
0 votes Thank Flag Link Thu Mar 26, 2009
The owner can't collect rent if they are not paying the mortgage. It is against the law to do so. If you have paid for an appraisal before the short sale was accepted by the bank you better make sure you have stipulated that you have first right of refusal. If a higher offer comes in and is presented to the bank they don't have to accept yours and you can't make the seller perform because the bank is the final decision maker. You might just end up spending more money trying to make other parties perform. The lease should be ok'd by the bank. They might allow you to lease for a minimal amount so that they guarantee that the property doesn't sit vacant.
0 votes Thank Flag Link Thu Mar 26, 2009
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