Does landlord still own the house we are living in?

Several months after we leased a house in CA, through a rental agency. a few months into the lease we learned that the owner of the property was not making payments to the bank. We contacted the owner who admitted he was in default and we discontinued making the payment to him. We then received notice that the property has been been put up for auction. That has been several months ago and has been postponed each time to the next month. We have been staying in the property for several months expecting to get a notice to move. We assumed that it would be bought by an investor or become a REO property. We have not received any notice until yesterday. The landlord who claims that he still owns the property sent us a three day notice to pay or quit.
My question is : How does he still own the property when it is still on the sale pending list? And if so, does that mean we have to vacate in three days? Obviously we don't have the several back payments he is asking for?
We know we have to move and are prepared for that but we were taken by surprise that we didn't hear from a new purchaser or from the bank.

Edited: 06/26/2010 at 09:05AM

Sean Williamson

Real Estate Investor · Redlands, California

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Icon_minipost Jul 23 '09, 02:04 AM

He still ownes the property untill the sale is done and title is transfered to the bank or new owner . it is a bad situation but you are obligated to the contract you have with the owner, his problem with the bank is his problem unfortunatley you are involved . there is always the chance he might save the property that is his right . even if forclosed the banks still have to give you some time i think three months and some times even the lenght of the rental contract . these are new laws to protect renters in theses events. problem is foreclosure his problem rent payment is yours and you still have to pay or move.

Edited: 06/26/2010 at 09:05AM by Sean Williamson

Rich Weese

Real Estate Investor · sioux falls, South Dakota

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Icon_minipost Jul 23 '09, 02:08 AM

The 3 day notice is just the start of the process. It will take awhile. However, you sound like you have chosen not to make the rent payments for several months(trying to benefit from the situation) and that is wrong. As pointed out above, you have a contract to pay the rent,,,period... Rich

Edited: 06/26/2010 at 09:05AM

Dick Green

Residential Real Estate Broker · Conroe, Texas

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Icon_minipost Jul 27 '09, 03:39 AM

Communication is the key to this situation. You should probably talk to the landlord and ask him directly about his situation. Maybe there's a way to come to some type of aggreement that will benefit all parties.

Can you buy the house? Ask him if he would sell you the home. Can the owner modify his loan? Can you make the modified payments directly to the lender by sending them in his name? Talk to the owner about some of these options? Make sure to ask him directly whether or not he owns the home. Ask him how much he's behind?

Remember, to be apologetic. If he is in a financial bind, which it sounds like....it's partly your fault. Also, he's not trying to remove you personally from the house....he just wants someone in there who's willing to pay the rent. He may be willing to work with you regarding the arrears. Explore various options with him. You may discover that what initially appears to be a problem can actually be an opportunity to profit.

As for rents....the previous posts are accurate. Your agreement is between you and the landlord, not you and the landlord's bank. In my opinion, there's no excuse for staying in his property and not paying the rent other than being denied safe/peacable and or healthy/sanitary habitation. Eviction processing may vary from state to state and sometimes from county to county. The rule of thumb is "don't pay, can't stay!"
Check the eviction laws within your locale.

Edited: 06/26/2010 at 09:07AM

Dave Fitzpatrick

· Westerville, Ohio

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Icon_minipost Aug 20 '09, 09:12 AM

Edith,
I know it's about a month after your initial post, but I'd be curious as to how your situation worked out. I tend to disagree a bit with a couple of the posts above me. Depending on the owner's loan documents, he may have lost the right to collect your rent, and instead, the bank may have had that right. Much of this again depends on the loan doc's and how far along your landlord was in the foreclosure process . You could have used this as an argument at any eviction hearing.

Regarding property ownership, (and this applies to anyone looking to rent a home), don't hesitate to check your county's auditor website if you suspect the person you're dealing with doesn't own the property. Most auditor records are now available online to the public.

Again, would love to hear what happened in your case. Hope all worked out well.

Edited: 06/26/2010 at 09:26AM

Jim Gordon

Residential Real Estate Agent · Ohio

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Icon_minipost Aug 21 '09, 09:07 PM

Edith you owe the rent to your landlord per your lease agreement. Just because he fell behind on his payments is no reason for you not to live up to your legal agreement. Now with you not paying the rent he has had no income on the property to pay his mortgage. You are one of the reasons that he is in forclosure.
By the way you say that you can not bring your rent current because you no longer have the money. Why didn't you place the money in escrow with the court?
You might have helped save the property that you are living in if you had made your payments on time.

Edited: 06/26/2010 at 09:27AM

Dave T

Real Estate Investor · South Carolina

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Icon_minipost Sep 13 '09, 04:07 PM

Originally posted by Jim Gordon

Now with you not paying the rent he has had no income on the property to pay his mortgage. You are one of the reasons that he is in forclosure.

Jim,

If you look at the sequence of events, Edith was making timely rent payments until she received notice that the property was in foreclosure. The owner had already defaulted on his loan and was facing foreclosure. Edith did nothing to cause or contribute to this.

The lender's loan documents probably has an assignment of rents clause and the lender is entitled to the rents. I agree that Edith should have escrowed the rents but I don't agree that she should have continued to pay them to the property owner once the foreclosure notice was posted. She could have escrowed them with the court pending disposition of the foreclosure, and doing so would stop any eviction proceeding as well.

Since she quit paying rent, and did not escrow the rent she owes under the terms of her lease, she probably does face eviction if she does not voluntarily vacate in response to the pay or quit notice, provided the owner wishes to take the proceedings to court.

Unless the owner can rescue his property from foreclosure, I will bet he just drops any attempt to evict. If the lender acquires the property as an REO, they may be more than willing to allow Edith to stay rent free if she agrees to maintain the property while the property is pending sale.

The REO sale may take quite awhile, but in the interim, the lender may appreciate that Edith's residence is a deterrent to vandalism. Good chance that Edith can get a full year of rent free occupancy if this property does go to foreclosure.

Edited: 06/26/2010 at 09:42AM by Dave T