rental house going to foreclosure

14 years ago

We are renting a house from a friend while our house is being remodeled. This is a verbal agreement. We have been paying her rent since November. I came home and found an auction notice posted on the house. She has confirmed she stopped paying the mortgage months ago but has been paying the utilities. She didn't tell us the situation until we found the notice. She called me back and said the bank is fine with us living there so long as we move out before the auction. I spoke to the real estate agent who has the house listed and she knew nothing about the foreclosure and seemed upset. She has been unhappy our friend ever let move in to begin with. She said this puts her in a bad legal situation. Should I contact the foreclosing bank? I don't know if they really know we are here since my "friend" concealed information from her agent. Her agent also told me there is no way the bank is okay with her taking rent from us and not paying the mortgage - meaning do they really know we are here. The house is due to be auctioned Feb. 11.

Comments (4)

Billl
14 years ago
Under the laws passed last year, you have the right to continue the rental for the length of your contract OR 90 days after the foreclosure if you have just been paying month to month. You are under no obligation to move out for an auction.

Your friend sounds embarrassed to find herself in this mess. That is understandable. If you can find a new place to live, it might be in the best interest of your friendship to do just that. If you can't find a new place immediately, call the bank and let them know that you are tenants.
worthy
14 years ago
Neat trick. I'm a private lender and I've seen this before. The "owner" doesn't pay mortgage, taxes or insurance but continues to take rent from a "tenant".

Here, in Ontario, Canada, the "tenant" still has rights and can only be evicted with an order from the Landlord and Tenant Board and an order of possession from the Court. If the tenant is in possession under a long term lease, the tenant has the right to stay until the end of their lease. And the mortgagee usually has the right to have those rents paid to it.
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chrisk327
14 years ago
Although tenant's rights vary here from state to state, worthy's comments are pretty much how I understand how things work in the US.

Personally, if you are in a forclosure situation, I'd get out. you don't have to, but I would.

yes, you could string along until someone triees to evict you, and fight it, as you have the right to notice etc. but if you have money, enough to pay rent, find another place on your own terms and get out of the drama.
brickeyee
14 years ago
"worthy's comments are pretty much how I understand how things work in the US."

Not for foreclosures, that is why the new federal law was just passed giving the tenants time to move it.
previously they could be evicted very quickly by the foreclosing lender.

If the owner sells a property the leases continue, but foreclosure is not a 'willing' transfer of assets.