Im 3-months into paying a landlord rent where I have been notified by the lender he has stopped paying and the lender is excelling a forclosure

Asked by David, Saint Petersburg, FL Mon Jul 19, 2010

process.By Law can I stop paying rent and escrow till further notice???

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Caroline York’s answer
Caroline York, Agent, St Petersburg, FL
Sun Jul 25, 2010
David, did you pay a security deposit and/or first and last months' rent? If so then you should contact your landlord and/or their escrow manager to find out where that money is at this time. When foreclosures affect tenants it can often affect their deposits and downpayments. Talk to your landlord and if they cannot provide you with documents as to where your deposits were deposited then ask for a letter from the landlord giving you permission to contact the bank that is holding your money. If you are in fear of losing your deposits and housing then you may want to hire an attorney. Don't worry about what is happening with the landlord. Worry about you and your next step. You don't want to find that you are suddenly locked out of your apartment with no deposit money for another apartment. Take action and do your homework. There is a tenant/landlord act in the State of Florida that you can read. http://www.800helpfla.com/landlord_text.html Good Luck!
2 votes
Thom Colby, Agent, Irvine, CA
Mon Jul 19, 2010
BEST ANSWER
David - Sorry for your troubles but unfortunately your situation is more common everyday, especially here in California.

Don't stop paying rent unloess you speak with an attorney and he/she advises you to do so. As others have said, and I tell everyone, you are getting what you are paying for - housing. You paid your rent on July 1st and today is July 19th so you've received almost all of what you've paid for.

If the property was foreclosed upon and the lender took ownership (not an individual) you would likely be contacted by an agent who has been assigned the property disposition. They will likely offer you something $$ to move out by a certain time. Typically they will give you a month and pay you up to 1% of whatever was owed on the property to help with relocation - this is called "cash for keys" and there will be no negative credit issue for you.

So, for example if the loan balance is $200,000 - you may get as much as $2,000 to move out in 30 days. You may also be asked by the banks representative to stay and continue to pay the same rent to the bank. The only downside for you is the "unknown".

If you can come to an agreement with the owner to end your lease make sure you get it in writing otherwise the landlord could come after you for unpaid rent - and they will because they need the money.

Best of luck and chat with an attorney as soon as you can.

Thom Colby
Broker / Owner & Certified HAFA Specialist
Thom Colby Properties
Newport Beach, CA
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2 votes
Linda S. Cef…, Agent, Franklin, WI
Mon Jul 19, 2010
David,

You have great advice from some of the previous answers. One thing I didn't see mentioned is that if you have a lease you need to talk to either a rental advocacy institution or a lawyer about how to go about breaking the lease and moving on.

In my State of Wisconsin I have heard over and over of tenants getting evicted under these exact conditions and unfortunately the eviction on the record was unable to be reversed. Unfair? Yes, but true.

Don't wait. Get the correct information asap.

Linda
Web Reference:  http://www.lindacefalu.com
1 vote
Don Tepper, Agent, Burke, VA
Mon Jul 19, 2010
Regarding escrowing your rent, check with an attorney.

However . . . .

If you're still receiving housing--the housing that's specified in your lease agreement--then you should still be paying rent. What your landlord does with your payment is between him and his mortgage company. I understand your concern--and I'll get to another point in a moment--but right now you probably have a valid lease. Check with an attorney. But, as noted, if you're getting what he agreed to provide--housing--then you're obligated to pay for that service. And read your lease. I doubt that there's an "out" if the owner encounters financial difficulty. If it is, then follow the procedures you agreed to. Otherwise . . .

Now, one problem does involve your security deposit. Assuming you live up to the terms of your lease, at the end of it (assuming your lease so provides) you'd be entitled to the return of your security deposit. However, as a practical matter, if your landlord is going into foreclosure it's unlikely (possible but unlikely) that he'll be in a position to return your security deposit.

Dp2's suggestions are good. Discuss this with the landlord. Be frank. On the other hand, recognize that he's not trying to rip you off. He's got a lot more problems than you probably do. So, see what you can work out. And as Dp2 also suggests, maybe there's some way you can purchase the property. I wouldn't suggest a lease-option as the first choice. Try what's called a "subject to." The owner would deed the property to you. You, in turn, would make up any deficiencies or arrearages. You'd then promise to pay the monthly mortgage due to the lender. The mortgage would still be in the owner's name, but you'd be paying it. At some point in the future, you'd refinance, getting a new mortgage in your name.

The two issues from your standpoint are: (1) do you have enough cash to make up the owner's arrearages? And (2) Can you afford the monthly mortgage? If you do, then you could solve the landlord's problems and yours.

Hope that helps.
1 vote
Scott Godzyk, Agent, Manchester, NH
Mon Jul 19, 2010
David there is no law specific law that states you can or can not withold rent if the landlord is not using it to pay the mrotgage. i do recomend if you stop paying the rent to the landlord to make sure you do put ist aside or escrow it. You definately want to talk to a lawyer at least for teh first free meeting to get some direction on FL law regarding landlord tenant matters and evcition. There may be a free hotline in yoru area where they can answer the question for you.

You also shoudl be careful if you gave a security deposit in that he doesnt illegally keep it, it shoudl be ina spereate account so make sure you ask that question as well.

good luck working things out
Web Reference:  http://www.ScottSellsNH.com
1 vote
Dp2, , Virginia
Mon Jul 19, 2010
I believe that should be OK, but you'll want to run that past an attorney.

However, what's the point in escrowing your rent? You'd still end up owing the seller that back rent while he owned the property. At this point, you might want to consider working with the owner and/or lender to cancel your lease. Another option is to buy the property maybe even via a lease-option.
1 vote
Loretta Buck…, Agent, Palm Harbor, FL
Sun Oct 3, 2010
David: this is a tough situation to be in, certainly, and you should know that you are protected under your lease agreement from being forced out of your home. There are many different scenarios which may lead to a tenant receiving a notice such as this one from a lender, and there are NO laws to protect you as a tenant if you do stop paying your lease agreement!

An escrow account must be set up through the courts, and the only way to do this is to file a complaint against your landlord, such as if they fail to fulfill their obligations under the lease. Read your rights under Florida State Law here: http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Displ…
0 votes
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