Can I collect rent while my house is in default?

This is a discussion on Can I collect rent while my house is in default? within the Mortgages, Refinancing, Foreclosure forum, part of the Buying & Selling Property category; One can only hold rent under certain conditions. You might talk to a Lawyer before your sued...

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Old Feb 20th, 2010, 09:20 PM   #11
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Default Re: Can I collect rent while my house is in default?

One can only hold rent under certain conditions. You might talk to a Lawyer before your sued
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Old Feb 22nd, 2010, 03:40 AM   #12
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Default Re: Can I collect rent while my house is in default?

I don't know where some of you are getting the idea that a landlord cannot collect rent while in default of their mortgage. They can.

To Unregistered 8:59p.m. You cannot withhold the rent for that reason. Withhold rent and face eviction.
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Old Jun 23rd, 2010, 08:01 PM   #13
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Default Re: Can I collect rent while my house is in default?

My mom died in February.

She had a condo in California worth $350K and a mortgage with a $500K payoff amount.

My sister/the-executor-of-the-estate has decided to just let the bank have it as there is no cash in the estate and she and I together don't have enough income to make the $2,500-per-month mortgage payments.

However, she has rented it out to a tenant for $1,600 per month (after informing the tenant that the property will eventually go into foreclosure).

She wants to start sending me half of the rent money she is collecting.

Is it legal for her to do this? If I accept half of the rent money, am I going to get myself in trouble?
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Old Jun 29th, 2010, 02:01 PM   #14
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Default Re: Can I collect rent while my house is in default?

As long as the landlord is still the legal owner, meaning the foreclosure has not been completed, they can still collect rent. Withholding your rent will result in eviction. What makes you think you are entitled to stay in a property for free? Foreclosure is simply transfer of ownership. Just as if they were selling the property to someone else, you would pay rent to the original owner until the sale is COMPLETE, then you would make arrangements with the new owner to either pay them the rent or move. If you break your lease by not paying, you can get evicted & lose your security deposit. Also, once a foreclosure is complete and bank has taken back possession, they will normally contact the tenant to make arrangements for the tenant to move (assuming the bank does not want to keep the lease in place - most don't). They will usually give you 90 days AND they will pay you to move out, sometimes up to a few thousand dollars. This is called "cash for keys".

You have two options when your landlord is going into foreclosure:

1. Continue paying rent as normal, wait for new owner (Bank) to contact you & decide whether to stay or move at that point
2. Move out. If you don't want to pay rent you need to move out. If you have a lease in place you'll be breaking your lease and will most likely lose your security deposit. It's possible that the owner **may** cancel your lease to be nice, but probably not.
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Old Jul 20th, 2010, 12:11 PM   #15
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Default Re: Can I collect rent while my house is in default?

Quote:
Originally Posted by sunlover View Post
One can only hold rent under certain conditions. You might talk to a Lawyer before your sued
Hello I am currently renting a house that we just found out that is in default, I live in Calif. I understand the landlord has the right to collect rent but what if there is repairs that need to be done like the plumbing we have no bathroom plumbing and the landlord refuses to fix it it will cost him 2300.00.

What can we do
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Old Sep 8th, 2010, 10:12 PM   #16
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Default Re: Can I collect rent while my house is in default?

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Originally Posted by Unregistered View Post
If you are going to continue to collect rent, why not use the money to pay the bank what you owe instead of letting it go to foreclosure?

Are you aware of the repercussions of having a foreclosure? Why would anyone simply "let" their property go to foreclosure?

In addition, many states require a landlord to have a Certificate of Occupancy. If you do not have this, you are renting illegally and cannot enforce payment from your tenant. You especially cannot keep the tenant's security deposit.

To July 18th's question: How did you come to be in possession of your landlord's mail? Surely a foreclosure notice does not go to the tenants. It goes to the mortgagee.

Again, if your landlord is legal, and can, in fact, rent out to tenants, his foreclosure status has nothing to do with your agreement to pay your rent on time. One does not cancel out the other.
define legal? What makes a landlord legal to collect rent? That is the question!
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Old Sep 12th, 2010, 08:55 AM   #17
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Default Re: Can I collect rent while my house is in default?

In California, I believe the law requires the bank foreclosing on a property to honor the lease of any tenant in the property.

Tenants with leases shouldn't worry about being kicked out, if they have a lease and are not month-to-month.

If they are month-to-month, then they could be given notice any time, no matter who owns the property, so again, exactly who owns it shouldn't matter.

The rent needs to be paid.
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Old Oct 22nd, 2010, 11:53 AM   #18
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Default Re: Can I collect rent while my house is in default?

To everybody who doesn't pay their obligations because their landlord doesn't pay theres:

Two wrong's don't make a right. You fail on your obligations and yet pretend to be mad when your landlord failed on his. Hypocritical. Take a long look at yourselves because thats the reasons your renters to begin with. Poor attitude.
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Old Nov 16th, 2010, 05:27 PM   #19
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Default Re: Can I collect rent while my house is in default?

Quote:
Originally Posted by Unregistered View Post
If you are going to continue to collect rent, why not use the money to pay the bank what you owe instead of letting it go to foreclosure?

Are you aware of the repercussions of having a foreclosure? Why would anyone simply "let" their property go to foreclosure?

In addition, many states require a landlord to have a Certificate of Occupancy. If you do not have this, you are renting illegally and cannot enforce payment from your tenant. You especially cannot keep the tenant's security deposit.

To July 18th's question: How did you come to be in possession of your landlord's mail? Surely a foreclosure notice does not go to the tenants. It goes to the mortgagee.

Again, if your landlord is legal, and can, in fact, rent out to tenants, his foreclosure status has nothing to do with your agreement to pay your rent on time. One does not cancel out the other.
The notice goes to the mortgagor... a mortgage is a note given by the buyer to the financial institution (mortgagee) for a loan. You provide a signed mortgage note to the bank and they provide you with a large stack of huneds and fitties.
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Old Nov 16th, 2010, 05:58 PM   #20
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Default Re: Can I collect rent while my house is in default?

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Originally Posted by Unregistered View Post
If you are going to continue to collect rent, why not use the money to pay the bank what you owe instead of letting it go to foreclosure?

Are you aware of the repercussions of having a foreclosure? Why would anyone simply "let" their property go to foreclosure?
***Lets say Jill was relocated for her job to Phoenix in 2005 and like any professional, she bought a 2 bedroom town home in an up and coming subdivision for $260,000. She loved this gorgeous little home and was very very sad when she found out here company was going to relocate her again in 2007. She called a local Realtor to put her house on the market and found out that the economic downturn that caused her transfer had also resulted in a 50% reduction in home values. The good news was her home only lost 30%. There was no way for her to sell her home. So she did what she had to keep out of foreclosure, she rented the home at for a good market rent and covered $600 per month of the mortgage herself while she lived in an apartment for 2 years eating spaghetti-o's. In 2009 she was notified that her taxes had increased $1800 per year and her impound account was short $1600. Her payment has now increased $300 per month. She owe's $253,000 the home is worth $180,000 and she has already come out of pocket $14,400 over the past 2 years. If it takes 4 more years for the market to be in a position to bear a price she could sell at she would have paid out an additional $43,000 on top of the $14,400. If she wanted to recoup that money she would have to wait an additional 8 to 10 years at the rate of appreciation to get that back and possibly be in a close to break even point.

She's already having to rent and living on beans and tortillas so what worse repercussions could there be?

I promise Jill wont try to keep your security deposit.

-Yours Truly,

Jack
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