what is the law about letting a tenant know that the house they live in is underforclosure. (Renting from a broker)

Asked by Boxer24, Palos Heights, IL Mon Feb 7, 2011

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Wayne Beals, Agent, Chicago, IL
Tue Feb 8, 2011
First and foremost, your question is a legal one and should only be answered by an attorney.

I do have some commentary on this item though.

First of all, tenant's rights are subject to local ordinances, which vary from municipality to municipality, county to county, and state to state. With all due respect to the Realtor from CT who previously answered, there may be some such ordinance, somewhere wich requires a disclosure from the landlord. You shuld always check with the local housing office, village government as to tenants rights and local ordinances.

Now, commentary about your specific question. Imagine a situation in which an individual would like to rent a home from a landlord. The landlord is behind on their mortgage and needs the rental income to pay the mortgage and avoid foreclosure. The potential tenant desires to move in, stay for an extended period, and does not want to deal with a foreclosure situation or otherwise. There are a few things you can do as a potential tenant to decrease the odds of this situation:

1. Check public records for litigation pending (lis pendens) concerning the property. If there is litigation pending, the home is likely in some stage of the foreclosure process. In this situation, you may still be able to get a valid lease from the landlord, but you may have to deal with a bank as your landlord at some point if the foreclosure is completed during your tenancy. Banks typically aren't interested in being landlords. Whereas your lease likely is not affected by the foreclosure, they will likely will not want to renew once your lease expires as your tenancy may impose an obstacle to sale.

2. Look for signs of financial distress: Has the property been on the market and vacant for a long time? How much does the owner owe on the property? Is it upside down on value?

3. Make sure you know that all lease terms should be in writing and on forms required by local ordinance. Make sure you understand that a one year lease is just that, a one year lease. At the end of the lease, you may have to move if the landlord either decides to no longer rent the property (subject to ordinances).

4. Remember, as a tenant, you have rights. You have those rights and more as a property owner. If stability is what you need, you should look to get into a position to purchase a home and be your own landlord. Trulia recently published a rent vs. buy index, outlining the areas where it's actually less expensive to own. You can further reduce this cost by becoming a landlord yourself!


Wayne Beals
Keller Williams
312 77BEALS
312 772-3257
Web Reference:  http://WWW.WAYNEBEALS.COM
0 votes
Spirit Messi…, Agent, Tucson, AZ
Tue Feb 8, 2011
The law actually is different depending on city and or state. I would contact a property management company for the advice or even better, a real estate attorney.

Best of luck.
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Feb 8, 2011
You need contact the property owner review all your questions . Did you receive a notice? Or confer with an attorney review your executed lease agreement

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes
Minna Reid, Agent, Woodbridge, CT
Tue Feb 8, 2011
There is no such law. Renting a property and not paying your mortgage are not related issues and the landlord does not have to tell you anything about their personal finances. If you are truly concerned do your own due diligence to find out.
Web Reference:  http://www.homesbyminna.com
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John Walin, Agent, Libertyville, IL
Tue Feb 8, 2011
This is not to be construed as legal advice.
The owner has a right to privacy and just because a notice of default was issued/recorded doesn't mean that the owner is going to evict you prior to lease expiration. This question I have heard other ways, like, do I still have to pay rent if the owner is going through foreclosure? The short answer is YES, you must still follow the contract you signed. Being a broker licensee doesn't affect the his ability to protect his privacy. I have seen where the bank sends notice to the home and the tenant opens the letter and moves out right away and stops paying rent. You still owe that landlord the rent even if he is not paying the mortgage!
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