Renting while house goes into forclosure

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Renting while house goes into forclosure

Postby phinneygal » Mon Nov 22, 2010 11:55 am

Hello,

our landlord has informed us that he is going into default. We understand that we can continue to live there during this process, but have a few questions:

Should we continue to pay rent if he is no longer going to pay his mortgage?
Can we make an offer to buy the house in a few months (we're not ready to buy now) and who do we make that offer to? The bank?
If he's under water, is there any way we can arrange to buy it from him directly?

any help would be much appreciated.
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Re: Renting while house goes into forclosure

Postby ira s » Mon Nov 22, 2010 10:11 pm

1. Should you continue to pay rent with your landlord in default?
Legally, yes. But a lot of renters, knowing that their landlords have stopped paying their mortgages and that foreclosure is looming, stop paying rent. I'm not recommending it or not recommending it. I've known people who have done it and have not suffered as a result.

2. Buying the place...You can't really deal directly with the lender directly until foreclosure has happened, at that's only if the lender takes possession of the property rather than than another party at the foreclosure auction.. It's possible to buy the place before it's foreclosed, but it's a longshot. You'd have to agree on a price with the landlord, the landlord will need to get the bank to consider a deal that brings them less than the amount owed.
You could possibly buy the house at the foreclosure auction, but it might be advisable to use a group like Vestus and their associated hard money lenders.

3. Once the foreclosure auction happens, federal law now states that you have 90-120 days past the auction date to vacate.

It's possible to buy the house, but the odds are against it. You might want to think about finding another place to live.
Your situation is becoming more and more common, but that doesn't make it suck any less.
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Re: Renting while house goes into forclosure

Postby Robroy » Mon Nov 29, 2010 9:35 am

I have an acquaintance that was in that exact position two years ago. She lived there rent free for quite a while, but always cooperated with the condo (a downtown Seattle unit) and the real estate people. Eventually she had to leave, but she had quite a bit of money saved up for the next apartment which, interestingly, was substantially cheaper and actually a little nicer.

The foreclosed owner is obviously not reporting her as not paying rent for obvious reasons...
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