Short Sell Vs. Tenant

Hello:

We received a call from our landlord three weeks ago that they are going to have to short sell the property. She mentioned that she is not making her morgage payments anymore so therefore she will allow us to stay there rent free out of good faith due to us being good tenants. She came over to the house last night to take pictures and give us something in writing. One of the items on the mini contract that she gave us was we will not be refunded out security deposit. We questioned this and the next day I recieved a call from her and she said we can either pay her our October Rent (which she returned to us) and November rent and then vacate the property by the end of Novemeber and she will give us the deposit back or we can contiune to live there rent free and not get out dposit back. She was very rude when she called and said that if we wanted to play games she can play games. We were simply just questiong something and it turn into this. My questions are...

Can you please let me know if she has the right to charge us rent even if she is not making the payment? and are we entitled to our security deposit back?

We also just signed a new lease in June of this year. Please HELP! She has given me until the end of the day to give her my decision and I need to know what's legal and whats not. I am pregnant and this whole thing has been taking a major toll on me!!

Thanks for your help!!!

The LL can still require rent from you even if she doesn't pay the mortgage. They are two different issues (your debt and her debt). You still owe your debt, even if she doesn't make good on hers.

It sounds as if she is being honest with you by telling you she no longer has your deposit. Yes, you are entitled to that, but getting it back is another story. You'd have to sue her for it if she fails to return it. You'd get a judgement in that amount against her, but that won't guarantee she'd pay it. Take the offer of free rent until the house sells. That way you'll get at least as much as your deposit was worth in value. If the house does short sell, the new owners would have to honor your lease. (It survives a short sale.) You'd start paying rent again when it was sold. If you get a foreclosure notice from the bank, plan on moving once it sells at auction since foreclosure will void your lease.