Question About Rental houses

[phyllis19]

I live in Indiana and I am currently looking to rent a house. The landlord I am considering filed bankruptcy in 2007. She has 16 rental houses and the bank never forclosed on any of them. She said the bank has never said anything about them either.

Well here is what I was wondering, since I am kind of in a tight spot with my living situations. I have 2 kids one is in a wheelchair and one is getting ready to have back surgery and with the holidays coming my living arrangements are tough.

I was wondering if I should take the chance and move into this house. What would happen if the bank did decide to forclose on it? Would I have ample time to move or are they just going to seize my house and all my assets eventhough I was an innocent party in the bankruptcy? How would this work?

I have also seen were judges around here stamped paid in full on deeds and handed them back to the person filing the bankruptcy. This however doesnt seem to be the case.

Im really curious Im on a fixed income and I need a place like asap.

Thanks for your time.

[HHM]

Run away. Don't get involved in this situation.

[justbroke]

I agree. With your particular circumstances, I don't recommend uprooting your family, only to be uprooted again (potentially).

Run, run, run.. and then run some more.

I had found this nice place to rent in a really nice area. They wanted $1,500/month to rent. I was suspicious because I checked the address and it was on a new golf course in a posh area of town. I then saw the listing -- it was for sale -- and the listing price was $999,999.00 (yes $1M dollars).

So, I finally asked the owner what the deal was... yep... foreclosure. He even said that I might only be able to live there for 6 months or so... and that my rental payments weren't going to the Bank.

I ran.

You should, in a like manner, run too.

If I were single and just had two or three boxes and rented furniture... sure, it would have been fun to live on a posh golf course (on the 9th hole) in a million-dollar home, for $1,500/month. But I was smart...

[HHM]

Also, keep in mind the big picture...

The owner, who is no longer paying a mortgage, is hitting you for rent at 100% profit to them. Do you really want to do business with that person? At the very least, you would want to verify (i.e. look at the County Recorders website or go the office) to determine who is the legal owner and what is the status of any foreclosure.

Also, don't be afriad to negotiate the rent, after all, its not like the owner has any costs associated with the home, offer them 25% of whatever they are asking in rent.

[justbroke]

HHM, that's a very good thing you bring up, and perhaps is worthy of it's own sticky... renting after foreclosure.

After my million-dollar mistake -- or it almost was -- I decided to check out EACH NEW landlord and the address to make sure it wasn't in Foreclosure or the Landlord in Bankruptcy.

It was met with surprising results!!!!! About 4 in 10 were in foreclosure! Yet, not one disclosed this fact. However, I got to be pretty good at telling which ones were pre-foreclosure. They wanted large deposits... regardless of credit.

[floridian]

im renting a house next month... i called the county clerk of court and made sure the owner wasnt in financial trouble...

[blindsided]

On the one hand, you don't need to worry about your assets, they are 100% safe from seizure. You are not a party to the bankruptcy and they don't want your stuff. In fact it would be grounds for quite a lawsuit!

The worst that could happen would be an eviction after foreclosure. The bank or any other new owner may well like to keep you as a tenant, though. It's probably more common in this housing market.

On the other hand you probably have greater than average need for a stable living arrangement, so this might not be a really good idea. You would have to check up on the property records to make sure that no legal action was initiated. (Many people are getting evicted as a surprise because their landlord never told them about the foreclosure.)

If the owner is still in BK proceedings there is an automatic stay preventing foreclosure, which is why "the bank hasn't said anything". If the owner is making payments on a plan or paying the mortgages out of plan they are not "paying nothing" either. That's a bit of an assumption. She could be catching up her arrears through a 13 or 11.

But, and here's the risk to you, if she can't keep up with the plan there could be a dismissal and that breaks the automatic stay, allowing the bank to proceed with foreclosure. So it all depends on your confidence in the landlord.

(I'm a landlord probably going into a 13 and we intend to keep our properties, but I would be the first to admit that if we got in trouble our tenants would suffer too.)

[spell]

Your lease is a valid contract with the owner of the house.
The fact that the owner changes does nothing to change the fact that you have a valid contract to stay in that house for that monthy rent.
Let the bank and the owner squabble over who gets to cash your monthly rent check. Just keep copies to prove you have paid it.

Realistically, it's been a year since this case was filed.
If the trustee decided there was value in the house they were looking to get out, they would have done it by now.
If the owner was looking to surrender their real estate empire and wipe their hands clean off all of the properties, they would have done it by now.

What you're more likely looking at is a mini-mogul who build up credit card debt while acquiring rental properties. They got rid of the credit card debt and kept the properties.
You're better off renting from him today than you were last year before the case was filed.

[justbroke]

Your lease is a valid contract with the owner of the house.

What makes it binding on the purchaser of a home/apartment/building is that they are purchasing the lease as well.

However, check your lease. There may be a sales clause in it which terminates the lease upon sale. If it's not in there, then you'd be okay... lease passes on to new owners. However, various clauses within a lease could allow a new owner to terminate the lease with notice.

The answer is in the lease.

[dingdong]

Most leases/rental agreements are void in most states after foreclosure. The time of notice for eviction varies from state to state From as little as 3 days to as much as 90 days. Nevada is really tough on tenants in foreclosures.

Some states have laws that provide for a lease that has been entered into prior to the mortgage to remain in effect.

You need to check your states civil code.

California just passed a law in July/08 increasing tenants in foreclosed homes notice from 30 days to 60.

I believe Oregon gives 90 days. It really varies.