**I am not a real estate professional or lawyer. This is how I understand things work in the Florida market. Consult a professional or lawyer if you want to be certain about the law and how to proceed in your own situation.**
Thank you for the informative responses. I did some investigating on my own and came up with a checklist of things to verify...
In the topsy-turvy real estate market of today, it has become just as important for a prospective tenant to perform a financial health checkup on the property owner.
1. Perform a credit check on the landlord.
2. Check if the property is listed with agents or advertised for sale.
3. Locate the property/owner records and look for any recent judgements or lis pendens that might indicate legal action on behalf of a bank (e.g. foreclosure proceedings) or home owner association. [Thank you, Chris Griffith!]
4. Locate the property tax records with the county property appraiser and verify the owner is current on his taxes.
5. Check that the owner has not missed any payments with his mortgage company.
(This is different than checking if the property is in foreclosure. A property does not enter foreclosure until the owner has already missed several payments or a single missed payment has been outstanding for several months.)
6. Check that the owner is up-to-date on his homeowners assessments. [Thank you, Chris Griffith!]
7. Place the security deposit and last month rent into a third-party escrow account. Write into the lease the conditions upon which the deposit and rent will be released to either the landlord or tenant.
Point #7 is especially important in my situation. I plan on writing a lease for a seasonal winter rental. It will be another 90 days before I move-in, which is enough time that even if the owner is current on his mortgage now, he could go into foreclosure before I ever step foot in the apartment. I wouldn't want to lose both my security deposit and the last month rent without ever having lived in the place!
Does anyone know if a property managment company can act as a third-party escrow holder? All the independent escrow services that I have found web sites for are focused on the escrow process surrounding real estate sales rather than leases.
Is it possible to get special dispensation to check with the mortgage company on the status of the mortgage? I know that in certain sales situations, it is possible for an investor to check-up on the status of the property owner's mortgage by having the owner sign an "Authorization to Release" form.
Pay your rent on-time every month even if the property enters foreclosure. The owner not meeting his obligations to the bank does not absolve you of meeting your obligations to the landlord as specified in your lease. Failure to pay rent could lead to eviction. That would be a permanent black mark on your credit record. If you do not think the landlord should continue to receive monthly payments, especially if you suspect he may not return your security deposit or last month's rent, you may be able to request that the local court handling the foreclosure receive the rent payments. [I am not sure about this last point. If it comes to this, you definitely should have a professional representing you.]
In Florida, it is possible for you to recover attorneys fees if you take your (potentially broke) former landlord to court. Section 83.48: Attorney's fees.--In any civil action brought to enforce the provisions of the rental agreement or this part, the party in whose favor a judgment or decree has been rendered may recover reasonable court costs, including attorney's fees, from the nonprevailing party.
Note that in a short-sale, as in a regular sale, it may be that your lease is not automatically terminated. Check your lease agreement for a phrase similar to, "The Lease shall be binding upon and for the benefit of the heirs, personal representatives, successors, and permitted assigns of Landlord and Tenant, subject to the requirements specifically mentioned in the Lease." If you are signing a new lease, make sure this provision is in there.