Does a tenant need to still pay rent if the house is in pre-forclosure?

Asked by Monkey Bread, 95133 Fri Mar 25, 2011

We, as tenants, know the owner of the home is not paying the mortgage but still wants rent from us. Do we legally have to pay?

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30
JoANN Guercio, Agent, Santa Clara, CA
Fri Mar 25, 2011
BEST ANSWER
Yes, the owner still owns the property, you are renting. Your agreement is with the owner, he gets rent until the bank owns the property.
3 votes
what if bank owns proberty
Flag Thu Aug 6, 2015
Bill Eckler, Agent, Venice, FL
Sat Mar 26, 2011
The owner of the property is responsible for and benefits from the property until the bank actually takes possession of the property, By not maintaining your responsibility to the owner, you could be opening yourself up to problems by not maintaining your rental agreement.

This is a legal issue that may best be referred to an attorney.

Good luck,

Bill
3 votes
Gary C. Rost, , San Jose, CA
Fri Mar 25, 2011
This requires a short answer - Yes. A lease is a contract between the property owner and tenant, and has nothing to do with regards to the relationship between the property owner and lender.
3 votes
Derek W, Agent, Mount Vernon, NY
Wed Apr 6, 2011
Paying rent is a personal decision which has consequences if you fail to pay. There is also a process for eviction which means the landlord has to go to court to begin the process. If you decide not to pay rent and the landlord starts a court process you may be allowed to pay the missed rents in court. The landlord will serve you with a notice demanding rent if you failed to pay. This is not an eviction. If you fail to comply then the landlord/sheriff will serve you with an order to go to court. Often, landlords who are in foreclosure do not go to court to evict tenants and in the long run the tenant is able to save sufficient monies to relocate before the sale. If this is your intent you should deposit all your rent payments in an account to pay the rents at a later date if required by the court.

You statement did not confirm the property is not in foreclosure. Missed mortgage payments does not automatically guarantee the bank has initiated foreclosure proceedings. If you have not confirmed the foreclosure status of the property you can also do that here, http://www.foreclosurecourt.org/find-out-if-your-home-is-in-…
2 votes
Jeanne Feeni…, Agent, Basking Ridge, NJ
Sat Mar 26, 2011
Hi there - your agreement to pay your rent is between you and the landlord. The owner's agreement to pay his mortgage is between him and the bank. Two separate agreements - yes, you are obligated under the terms of your lease to pay your rent.

Best,
Jeanne Feenick
Unwavering Commitement to Service
Web Reference:  http://www.feenick.com
2 votes
Laura Gentile, Renter, Bronx, NY
Sat Apr 12, 2014
Hello i live in NY an my landlord no longer owns house its Bank owned now an shes asking for rent which ive been paying its already being auctioned online as we speak. Isnt that against the law?
1 vote
Nick Sakalis, Agent, Syosset, NY
Thu Sep 12, 2013
As the Tenant, he or she has an obligation to pay. However whenever in a situation such as leasing in a pre-foreclosure, the tenant should always consult with an Attorney for the appropriate guidance.
1 vote
Joanna Jensen, Other Pro, Livermore, CA
Thu Sep 12, 2013
Hi,

The agreement for rent is between you and the home owner. Unless they just bought the home and are in foreclosure already that may be considered rent skimming.

However, even if they are not paying their mortgage you still have to pay rent if you want to live there.

The homeowner is mos tlikely working with the lender to modify the loan. If you stop paying rent they can have you evicted. if the home does go back to the lender you may have rights to stay their but only if your paying your rent and your rental agreement was originated before the notice of default was issued.

Good luck.
1 vote
lynn7162003, Renter, San Jose, CA
Wed Jun 12, 2013
we live in a home that is in preforclosure, and Our lease is up at the end of june, our landlord is in jail and will be for a long time. what should we do?. And do we get notified when the bank takes over. thanks
1 vote
Ruth and Per…, Agent, Los Gatos, CA
Tue Mar 19, 2013
Hi

Yes, your contract is with your Landlord, who owns the property
or asset.

The Landlord can always send you to collections and ruin your credit.

Remember, a Landlord can make good on all dues prior to Auction.

Best regards
Perry
Web Reference:  http://www.ruthandperry.com
1 vote
llewen, Renter, Santa Ana, CA
Tue Jan 8, 2013
yes, but this is listed as his primary residence, does this change anything as far as us getting out, it is unfortunate but my credit scores have dropped due to medical reasons, and we are just trying to stay until other arrangesments can be made,
1 vote
llewen, Renter, Santa Ana, CA
Tue Jan 8, 2013
we have rented a house for over yr, the house has been in constant default, the whole time renting, the owner has just served us with a 30 day notice and it is still in default, what are our rights
1 vote
Christine Lo…, Agent, Sterling, MA
Sat May 28, 2011
Monkey Bread
As you have read you are obligated to continue paying your rent, however I would strongly recommend that you also keep meticulous records of ALL of your rent payments and photocopies. Just to make sure you are completely covered.
It is not unheard of for a property that has renters to be sold with the current occupants remaining in the property. (at least here in MA.)

Good luck!!!
1 vote
John Arendsen, Agent, Leucadia, CA
Sat May 28, 2011
Monkey Bread, It would be nice for you to respond to some of the very good advice that you have been receiving from some pretty astute professionals who have taken time out of their busy day to offer up on this thread.
1 vote
Rachel LaMar,…, Agent, Carlsbad, CA
Sat May 28, 2011
Hi there,

Yes, you still have an obligation to pay your rent under the terms of your contract with the owner. That contract is between you and the owner, and the lender has nothing to do with it.

It is interesting to point out that the owner may be liable to the lender in certain situations for the amount of rent collected between the time of default and sale, such as when the owners sell the property as a short sale. But whether the lender actually ends up coming after the owners for this money is beside the point as far as you are concerned, since your legal obligation is bound by the contract you signed with the owner.

I advise you to speak with an attorney if you have questions about your legal obligations.

Rachel LaMar, J.D.
LaMar Real Estate, Inc.
1 vote
Shanna Rogers, Agent, Murrieta, CA
Fri May 27, 2011
Hi Monkey Bread,

Yes, you are required to continue paying your rent. You have a contract with the home owner, not with the home owner's lender.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
1 vote
Gary Geer, Agent, Antioch, IL
Fri May 27, 2011
Monkey Bread,
Pre-foreclosure status of the property has nothing to do with your agreement with the owner / landlord of the property. If you have a lease you must preform as per the agreement or the landlord can have you evicted. Seek legal advice from an attorney before taking any such action. You may want to start looking at other homes for rent depending on when your lease is up. ....

All the best,
Gary Geer

http://www.GaryGeer.com
1 vote
Tni LeBlanc, Agent, Santa Maria, CA
Sun May 22, 2011
In California, the answer I've received is clearly yes you do. http://realestatefraudinfo.com/renting-a-home-in-foreclosure/
1 vote
Michelle Car…, Agent, Coppertino, AL
Sun Apr 10, 2011
Your agreement is with the owner, not the bank. If the owner is negotiating a loan modification, that is different than a short sale or foreclosure. You would be wise to get some legal advice now at the early stage. You can also contact Tri-County Apartment Association.
1 vote
Denise A. Sz…, , San Jose, CA
Fri Mar 25, 2011
It not the same as being a home owner. That takes months to go into default. If you do not pay your rent you will be evicted.
1 vote
Pat Chadwell, Agent, San Jose, CA
Fri Mar 25, 2011
You should continue to make your rent payment. The lenders usually have a provision in the note that they can take the rent in event of default by the borrower/owner. I just would not make the situation worse by not paying your obligation.

Good question.
Pat Chadwell
Realty World - Residential Specialists
http://www.patchadwell.com
Web Reference:  http://www.patchadwell.com
1 vote
Monkey Bread, Renter, 95133
Fri Mar 25, 2011
We are on a month to month basis
1 vote
Denise A. Sz…, , San Jose, CA
Fri Mar 25, 2011
Yes, the seller is still making payments and you still have a lease. You are still living there. If the owner gives an an out of your lease than and only than can you get out of it. But if you have a 12 or month to month you need to pay your rent.
1 vote
Fred Griffin, , Tallahassee, FL
Fri Mar 25, 2011
The following is just a general discussion, and is not Legal Advice. Only an Attorney can give you Legal Advice. See a Qualified Attorney for Legal Advice.

A lease is a lease, and if the Landlord is still "Owner of Record", the Lease may very well hold up in a Court of Law. But Some Renters believe that the Landlord (who is heading into Foreclosure) may not go to Court; so the Tenant attempts to "re-negotiate" the rent with the Landlord.

Real Life Example: I know a man who was paying $2500 rent; he found out that the Owner was in "Lis Pendens" (approaching Foreclosure). He told her what he knew, and said he could only pay $1000 per month, otherwise he would move out. Since she was just pocketing the money, and did not want to lose him as a Tenant, she agreed. He lived there for close to one year, at $1000 per month instead of $2500 per month. A substantial savings, to say the least.

But again, I advise you to seek the Advise of a Qualified Attorney before breaking a Lease or failing to pay on a Lease - unless the Landlord agrees in writing to accept less.

Best wishes to you.
1 vote
Bethk1320, Home Buyer, San Jose, CA
Thu Aug 11, 2016
How does this work if rent is collected by a property manager?
0 votes
Cdebbie8369, Home Buyer, San Jose, CA
Thu Aug 6, 2015
parents found out landlord proberty is in foreclosure, there is bidding going on what should they do pay rent ECT
0 votes
John Arendsen, Agent, Leucadia, CA
Sat Apr 12, 2014
I can't believe folks are still replying to this over 3 year old question. I have to believe Monkey Bread has resolved this issue by now. LOL!!
0 votes
John Arendsen, Agent, Leucadia, CA
Mon Mar 18, 2013
Once again, you may want to refer to my answer below. I did have a rather unusual experience on this very subject. I'm not giving you any legal advice but the situation I described did save the tenant a tremendous amount of money.
0 votes
John Arendsen, Agent, Leucadia, CA
Sat Mar 26, 2011
Once again, I would encourage you to at least have an initial interview with an attorney on this matter. Initial consultations are usually free. If the attorney thinks you have a viable case he will so advise. As I said I just went through this with a client about 3 months ago. It's definitely in your best interest to check out. Nothing ventured nothing gained.
0 votes
John Arendsen, Agent, Leucadia, CA
Fri Mar 25, 2011
I would find out if the homeowner is making his payments. If he's not you just may want to speak with a RE attorney very soon. I just had a situation with a client that was very similar. My client was leasing a home from a homeowner that did not disclose the fact that they were in default.

The homeowner was instead pocketing the rent money and stiffing the lender altogether. Hence, the attorney advised the renter to quit making payments directly to the existing homeowner as nothing was being applied to the loan.

I'm not advising you to quit making your payments that should be discussed with an attorney. But should you opt not to you would be wise to set your rent money aside earmarked for the lender when they actually take possession of the home through foreclosure.

You then might be able to cut your deal directly with the lender as they would prefer to keep the home occupied until they sell it. If you are interested in purchasing the home and you have the credit and can put some skin in the game you may want to work with a short sale specialist to see if you might be able to buy it.

I've seen some pretty interesting things happen. If nothing else you continue staying in the home until it is sold. I've even seen a renter get a cash for keys offer from the new owner just to get them out in an peaceful and orderly fashion. Good luck
0 votes
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