LANDLORDS LOSING RENTAL PROPERTY IN FORECLOSURE

There is a lot of information available on the internet for tenants that are renting a house in foreclosure – but what about landlords? Losing a house in foreclosure for a landlord can be stressful and financially difficult. Many landlords are relying on the rental income to meet their needs, and it can be very embarrassing have to explain your financial hardship to an upset tenant.

Most of the landlords that our law firm represents want to do the right thing and keep the house, but circumstances out of their control have created a financial problem that the landlord cannot stop. Our goal in representing landlords in foreclosure is to help landlords understand their rights, meet their obligations to their tenants, and tackle this difficult situation a smoothly as possible. The following information answers common questions asked by landlords about their rights and responsibilities when losing a rental property to foreclosure.

CAN MY TENANTS STOP PAYING ME RENT?

No, tenants are contractually obligated to continue paying rent. Although you may not be making the monthly mortgage payment, when you permit someone to live in property you own, you assume a great amount of liability for all incidents occurring on your property. Your rental unit also incurs wear and tear from the tenants use and enjoyment of your facilities. You are responsible for the maintenance of the property while you own it and, as such, a legally entitled to compensation from the tenant through their payment of rent.

CAN I STOP MAKING REPAIRS ON THE FORECLOSING PROPERTY?

A landlord who is not paying the mortgage still has the responsibility of maintaining the habitability and safety of the premises for your tenants so long as they are the owners of the property. This maintenance and liability has an economic cost to the landlord that is compensated for by the monthly rent received from the tenant. Landlords who are unable to collect rent during foreclosure are paying these maintenance and liability costs with no ability to recoup their losses. Regardless of whether the tenant pays the rent, while you own the property, you have a duty to keep the premises habitable and undertake whatever maintenance and repairs are necessary to keep the property in that habitable condition.

HOW DO I GET MY TENANTS TO KEEP PAYING RENT ONCE THEY KNOW THE RENTAL PROEPRTY IS IN FORECLOSURE?

Many tenants use a pending foreclosure as an excuse not to pay the monthly rent. This is a direct violation of their rental agreement and a landlord has the right to pursue collection of these funds. But, smart landlords will take the time to think about the position they have put the tenant in and recognize the great amount of stress and frustration that tenants feel when their home is about to be lost in foreclosure through no fault of their own.

Our office recommends that landlords meet with their tenants and keep them informed of the pending foreclosure as soon as possible. We often advise our landlord clients to discount the rent for their tenants while the property is in foreclosure. When tenants get a rent discount, it goes a long way to keep the tenant paying because it allows them to save money for moving out and offers them an accommodation for the frustration and surprise they feel in a bad situation. Landlords that communicate with their tenants and offer discounted rent during the foreclosure process have a much easier time in collecting rent than landlords who ignore the tenants and do not deal with these issues directly.

Our firm has a strong background in foreclosure and has a deep understanding of landlords facing these circumstances. Usually landlords in foreclosure have substantial debt and cannot afford to be out of pocket any additional expenses, nor can they afford to lose rental income. If you have a rental property that is in foreclosure and your tenant has stopped paying, you are a good candidate for rent collection help. Our attorneys have an excellent track record of assisting landlords in foreclosure with collecting the rent up until the time that the foreclosure takes place.