BiggerPockets

I have been renting a nice house for 10 months now. I am on a month to month which the owner wanted. I needed a place and agreed to it. I have been making my rent on time every month. I know she wanted to sell the house but she said after the market calms down a while she would put it for sale. She insisted it wasnt for a year or so. Every month I would ask her if things are fine and she would always tell me they were.
8 months later, I recieve a notice of default letter (taped to my door) saying the house would be for sale 10 days later. I called the landlord and she wouldnt respond to my calls for 4 days. She then told me she hired a lawyer and saved the house by filing Chapter 11 bankruptcy. She said I had a few months left and she saved her house. I confirmed this with the lawyer and now I recieve a letter of Order to show cause because she (owner) failed to comply with the bankruptcy code/rules and didnt comply with the orders of the court. SHe failed to file the neccessary paperwork with the court. The paper says the court date is for dismissal,conversion, sanctions, contempt and more.

I am planning on attending this court hearing. I have called her numerous times with no answer. She wont be honest with me. Now its the first of the month and she wants her rent money. I am not paying her. If anything I figure she can send me the 3 day notice because the court is only 2 days after rent is due. I want to make sure my rent is going to be because Im here in the house.

I have been told I can take over her payments. I dont know if the house will be foreclosed on or she still has possession of it. Its so tricky and I am unfamiliar with these laws. I would love to stay here longer and try to work out a deal.

This landlord is so secretive. I cant wait to go to court and hopefully gain some answers. I just dont know what to take with me or what to say. Or, who to say it too.. I know there are "KEY" words but I dont know those words.

Any advice would be greatly appreciated

YOU CAN ALWAYS HOLD OUT FOR WHAT IS CALLED CASH FOR KEYS WHERE A DEFAULTED LOANS TENANTS ARE OFFERED CASH FOR THE KEYS TO THE HOME. YOU CAN ALWAYS STOP PAYING YOUR RENT AND SAVE THE MONEY YOUR PAYING OUT TO THE OWNER. THAT CAN WORK AGAINST YOU IN A FEW WAYS TOO. REMEMBER YOU HAVE RIGHTS AS A RENTER

You can spend a lot of time and energy trying to do something. Most likely, there will be a sherriff's sale and the bank will get the house. They will show up shortly after that and evict you. Stop paying rent, save up as much as you can and find a new place. Its unfortunate, but lots of folks are getting hit with the same situation.

No offense, but what are you waiting around for? Get out. Do not pay any more rent and find another place to move. She lost the house. Don't play games or rely on someone else to put a roof over your head or you most likely will end up sleeping in your car. Just find another place to live.

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It's a personal decision but I agree that you should stop paying rent. The owner is keeping this money and not paying her mortgage. It would be foolish to give her that free cash when she is being irresponsible. If you want to pay someone then call the bank and send them the check. They money belongs to them. I just talked to an attorney about this very thing, he said that when the owner has stopped paying the mortgage, the rent money legally belongs to the bank (at least in California). Either pay the bank or save up for when you do move. I doubt the owner is going to evict you when they are in foreclosure themselves. If the bank takes the property back then they may offer you cash for keys. That is, they give you some money in exchange for the keys so that they don't have to evict you. If an investor buys the home, just be ready to move once they have purchased it and they won't have to evict you.

The bottom line, in my opinion, do not pay the owner another penny unless she brings the home current.

Good luck!

Michael

What a scam!!, in today's market it seems like its so typical landlord take the money of the renters.
So better make sure at first that you are with the trustworthy landlord.

MikeOH is 100% right.

Although you are entitled to do whatever you want, legally you are responsible for the rent up until the day you are asked to leave (most likely by the bank through a sheriff). Although it doesn't seem fair or right, that is the way the laws are set up now. Their foreclosure has no bearing on your rent.

You would have a tough time suing them for anything and would waste a lot of time and energy going down that path.

Although the laws are constantly changing for people in circumstances like yours, it hasn't happened yet where you don't have to pay the rent. it is doubtful you are going to be able to take over the house payments from the bank, though anything is possible. You could also ask them if you could rent if from them, but unless it is a Fannie or Freddie lender, you probably won't have much luck.

Sorry, I know it stinks, but this is how things are set up now.

And if you don't pay your rent, you could be evicted and as Mike says, you DEFINITELY don't want that on your records... as renting would be nearly impossible afterward.

Originally posted by Michael Gier

That is TERRIBLE advice, both from a legal and moral standpoint. The tenant has a legally (and morally) binding contract with the owner and is responsible to make that payment unless a court orders otherwise. The owner's financial situation has absolutely no bearing on the obligation of the tenant.

You must not have read my entire response. I suggested that the current landlord in default should not be receiving your rental check, but the bank.
I agree that a tenant is legally binded by the lease contract and failure to perform on that contract could have some adverse consequences. Give legal notice if you wish to move and if available via your contract, and when keeping good on your lease, pay the bank, not the landlord who is pocketing your payments (illegally in most cases)

Actually, it is not illegal, at any time for the landlord to pocket the rent payments. The illegal part is not making his constractual payments to the bank, just as it is illegal for the renter not to make his contractual payments to the landlord.

The only remedy that is "legal" is to sue the landlord for not performing according to the contract and get permission from the courts to "bank" the payments without recourse for the landlord until he corrects his contractual agreement.

Now if the landlord never does correct the problems and the bank forcloses, you may be in a position to bargain with the bank due to the funds that have been "banked". As to wheather those funds are yours or the landlords or the banks will be up to the courts to decide in the final resolution of things.

In month to month lease any party can give notice within month as far as i know...