Foreclosure

[dr9]

It appears my landlord is getting foreclosed on the house I rent, although we've been paying on time for over 2 years. He's already had his primary residence foreclosed, and now the letters are showing up here, along with a notification of failed delivery of a certified letter from the law firm that has been sending other letters. I've been dropping the mail off in his actual mailbox down the road, but haven't had a conversation with him about it except him telling me "he's selling the house".

Sigh.

Gonna have to move.... on really short notice. I heard there's a new law where the REO of the possessing bank has to honor the lease agreement if you are in good standing, which I am, but that almost seems like more work than just moving, especially since it would only buy me time through the summer.

Just venting at the pub... drinking a disgusting "Shock Top" hefeweizen.

 

[Medsen Fey]

I can't speak for certain, but if someone buys the house as an investment property, they may be tickled pink to have a good renter already in place who is paying on time. I know I sure as heck would. You could take a wait and see approach - you might not have to move at all.

Of course, you might also be able to work out a deal to buy the place yourself - short sales do work.

 

[slowbie]

Of course, you might also be able to work out a deal to buy the place yourself - short sales do work.

Depending on your situation, this is worth at least checking out. My wife and I have friends who recently bought a short sale house that is more than twice as big as our two bedroom apartment and they pay less per month than we do.

 

[dr9]

I can't speak for certain, but if someone buys the house as an investment property, they may be tickled pink to have a good renter already in place who is paying on time. I know I sure as heck would. You could take a wait and see approach - you might not have to move at all.

Of course, you might also be able to work out a deal to buy the place yourself - short sales do work.

Yeas, that's true about getting an investment with a lease agreement, but it's worth X and he owes X times 1.5

No lease agreement is worth that.

As far as getting a shortsale, that's not in the cards since my gf is a student with very little income and good credit and I have more than enough income to qualify but very bad credit (those damn 20's).

It will make a great short-sell for someone else though.

 

[Medsen Fey]

An investor who buys it won't owe 1.5X. He/She will buy it for X (or perhaps even less). So keep your fingers crossed.

 

[wayneb]

Especially in the current real estate market - the bank almost certainly doesn't want to foreclose on an investment property, since selling it will take even more work than what they've already got on their hands with principal residences. It may well be that for the indeterminate future (which could be a year or longer past your current lease), the bank may be more than happy to have you as a tenant in residence on a month-to-month lease extension. This is especially true if your current lease has a monthly extension option built in (many do).

You might want to do some homework, as in finding out what institution is pursuing the foreclosure, who the person is handling the case there, and you can pre-emptively either call them or write a letter offering to stay past your current lease term. At no time should you suggest that you are willing to leave before your lease term is expired. They have no legal basis to have you evicted (at least not in most states), so you have nothing to worry about (most likely) until the lease term is up.

 

[dr9]

Thanks yall.

I appreciate the optimism and info. I've heard horror stories on Clark Howard; Sheriff shows up out of the blue with a notice to vacate 48 hours and such. According to Clark, alot depends on your state. I am grateful to the landlord who allowed his own house to get foreclosed before he allowed ours to, we don't know him personally but have some mutual friends, he seems like a class act in all respects, just bad times.

 

[socpsy]

Sorry to hear of your situation. I hope it all works out without too much hassle on your part.

 

[wayneb]

Here's some important info from the Georgia Real Estate Board license study guide. While it is not a verbatim quote from applicable law, it does provide information reviewed by lawyers and generally accepted as valid and in compliance with statute:

Buying a Property with Existing Lease
It is not uncommon for residential real estate to be sold while the property is occupied by a tenant. The most common question that gets asked in this situation is whether this gives either the landlord or the tenant the right to get out of the lease. As a general rule, the new owner and the existing tenant are both bound by the existing lease unless the lease specifically provides that either the landlord or the tenant has the right to terminate the lease upon the sale of the property.
However, the new owner will most likely lose the right to terminate if he accepts rent from the tenant. This is because the new owner must choose between taking the property subject to the lease or without the lease. Therefore, if the new owner plans on terminating the lease, he or she should do so quickly. The notice of termination in such a situation can be sent by either the existing owner prior to the transfer of the property or by the new owner anytime after the closing.

FWIW, foreclosure is usually deemed equivalent to sale of a piece of real estate, so this is your situation. If the bank takes possession, as long as you don't have a kick out upon sale clause in your lease (read it carefully!) they can't evict you before the lease term is up.

BTW, I am not a lawyer, and cannot give legal advice (that's a variant on the usual disclaimer). But I did stay in a Holiday Inn once a few years back...

Seriously, you should always check your rights whenever some legal proceeding may come up to bite you. Here's another wrinkle in GA law: If you move before your lease term is ended and if the new owner (the bank in this case) hasn't agreed to a lease termination in writing, YOU WILL be liable for all the remaining rent on the lease term. In addition, you give up most of your rights to your security deposit. Don't move out any earlier than you have to!

 

[dr9]

That's kinda what I heard. However, I heard on the radio this week on Clark Howard about a tenant who is in good standing, etc, and the deal with honoring the lease agreement is in the hands of whatever agent (local or not) represents the REO of the bank, in this case, Well Fargo as the servicer. This caller said the agent told them to get out. They quoted the law to her. She said "good standing means what I says it means" and Clark Howard confirmed this is true. All the agent has to do is tell the REO "they aren't in good standing" and all deals are off. Sure, it's something you could sue over, and get a court date 4 years from now.... but in the meantime, the way the law is, Clark said it's best to be nice to the agent, because if they find a buyer, they know many ways to undo your lease.

In case you all don't know who Clark Howard is, he is a consumer reporter talk show host... consumer advocate type guy base din ATL but sydicated, whether it's real estate, investments, gadgets, cars, diet pills, latest scams, rackets and rip offs. He takes no endorsements like Ramsey does.

 

[wayneb]

Well, you have to do what you think is best in your particular situation -- but don't fall into the trap of expecting the gloom and doom scenario to be the most likely to occur. Certainly make contingency plans - but why not in the interim also stick around just to see how things play out?

 

[Matrix4b]

You may be able to contact the land lord's bank and rent through them. Letting the bank know that you have rented with no lates in the last 2 years. Then when it gets forclosed on the bank can just rent to you. Explaining to them that you cannot afford to buy the house due to both the poor market and the credit situation but you have no desire to move. The biggest pain for a bank is a forclosed house to dispose of. They may decide that rather than selling in this market time they could get rent and set it up through an agency to manage it for a price of the profits. Then down the road you may be in a better position to buy the house if you wish. For this I would offer a 2 year rental agreement if the price is right. Solves both you and the banks problems. Ofcourse all is off if the owner sells, then you contact the new owner and explain the situation. It's a hope.

The bank sponsoring the loan should be public knowledge and found at your local courthouse. Oh, but wait you said you are getting mail from the bank. Hey problem solved, google their phone number on forclosures and search for a contact. Yeah, it sounds sneeky as far as the deliquient land lord is conserned but for your end and the banks end it is win win. Who knows, due to the market you may get a better rent price. Banks hate having houses but the reason that they hate it is because it isn't making them money like a loan would.

 

[dr9]

We moved into the house behind it two weeks ago. The house was sold by public outcry on Tuesday, and the landscape crews are there cleaning up the yard. I find it horrendous that we had to find out about this on our own, quite by accident. Had we not found out, our ass would have been in the street. And the amount owed on the house was only $78k according to the public notice, although there could have been a second lien I'm not aware of, probably to some bankrupt bank. That irritates me because he was trying to sell the house for $103k for several months beforehand (our tip that something was up... why would he be trying to sell it with good tenants that write him a big check every month?) and it's appraised value is only $85k (based on neighbor's appraisal in identical house).

Anyway... that's how this is ending. We got a washer-dryer out of the deal, and this house also has a brand new heating/air unit and more modern appliances. Other than the financial burden, it's a better situation.

 

[Gardenmead]

Good luck dr9! I'm sure you will figure something out...If I lived nearby I would offer to help you move your stuff if needs be. Do you have a lot of fermentation equipment you would have to move?

 

[fatbloke]

We moved into the house behind it two weeks ago. The house was sold by public outcry on Tuesday, and the landscape crews are there cleaning up the yard. I find it horrendous that we had to find out about this on our own, quite by accident. Had we not found out, our ass would have been in the street. And the amount owed on the house was only $78k according to the public notice, although there could have been a second lien I'm not aware of, probably to some bankrupt bank. That irritates me because he was trying to sell the house for $103k for several months beforehand (our tip that something was up... why would he be trying to sell it with good tenants that write him a big check every month?) and it's appraised value is only $85k (based on neighbor's appraisal in identical house).

Anyway... that's how this is ending. We got a washer-dryer out of the deal, and this house also has a brand new heating/air unit and more modern appliances. Other than the financial burden, it's a better situation.

Sort of followed this, but didn't comment as things are very different here with rental housing dr9. Yes there's quite a few ways of getting chucked out, but pretty much nothing (legally) for short term evictions. I always find it a bit of an eye opener to hear how somewhere that is supposed to be as "21st century" as the US (not just nationally, but state level as well), still seems to have some of the rules, regulations and laws that are decidedly 19th century in practical terms.

So I'm glad to hear that it seems to have worked out well over all for you dr9.

Lets face it, after family, pretty much the most important thing in life is the roof over your head........

regards

fatbloke

 

[dr9]

What are mortgage interest rates in the UK? Do the banks distinguish between invesment property and primary residence? The only reason I ask is because I can hear a voice saying "If you put laws in place to protect renters that will prohibit a bank's opportunity to repossess it's collateral, interest rates will be higher and loans more difficult to acquire."