Foreclosure

My older sister is renting a town home that is set for auction on August 3rd. It was set for auction last August, but her landlord negotiated a short sale to prevent the auction. Well a year later, it hasn't sold and the bank is moving forward with the foreclosure process. Her landlord told her not to worry about it because his listing agent told him they wont auction it off. The letter stating the date of the sale says he can prevent it by paying the entire principle($172,000). I told her I think he is just trying to make sure she still pays rent on August 1st and I would instead place the rent money into a saving account. I also told her nothing is stopping her from going to the court house steps the day of the auction to see if it sells and that if it doesn't then the bank will become the owner. I explained to her about the federal law that will give her 90 days shall the new owner or the bank file for eviction. Is there something I am missing thinking that it is very unlikely he can prevent the auction again? I guess he could file for bankruptcy, but that would just delay it being it is investment property. Any advice I should give her, or am I wrong with what I have told her so far?

If she has a written lease, she is protected by that lease. If her lease expires on 31 March 2011, she can choose to stay until her lease expires. Whoever buys the home, is legally bound to honor her lease.

You might be right about the August rental payment. He might be trying to get the money before he loses the property. It doesn't matter, for her, however. As long as she pays the current owner, the new owner can't collect until September forward, if she keeps proof of the payment.


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She is on a month to month tenancy now, so I am not sure of any protections that would provide other than the 90 days if she is evicted. It shouldn't make a difference as far as if someone buys it or the bank takes it back, correct? I told her if someone buys it as investment property, they would more thank likely let her stay and of course start paying them rent. I guess her worry is that she will pay the current owner, her landlord, and then be forced to move. She'd rather give that money to the new owner/ bank or put it toward moving expenses if she is evicted after the sale takes place. Which is why I suggest to her that she stick in in savings and sit on it until she finds out what happens at the sale and then take it from there. Of course the sale is just two days after the rent is due so she probably could just hold on to it. Short of bankruptcy, what are the chances of him stopping the auction all together yet again? I am sure the creditor is tired of waiting which is why they started the process again after it didn't sell through a short sale.

MorgansDaddy said:

She is on a month to month tenancy now, so I am not sure of any protections that would provide other than the 90 days if she is evicted. It shouldn't make a difference as far as if someone buys it or the bank takes it back, correct? I told her if someone buys it as investment property, they would more thank likely let her stay and of course start paying them rent. I guess her worry is that she will pay the current owner, her landlord, and then be forced to move. She'd rather give that money to the new owner/ bank or put it toward moving expenses if she is evicted after the sale takes place. Which is why I suggest to her that she stick in in savings and sit on it until she finds out what happens at the sale and then take it from there. Of course the sale is just two days after the rent is due so she probably could just hold on to it. Short of bankruptcy, what are the chances of him stopping the auction all together yet again? I am sure the creditor is tired of waiting which is why they started the process again after it didn't sell through a short sale.

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Why doesn't she get him to enter into a one year, two year lease?
If she had a lease, she would be secure for the entire term of the lease.
If the bank or someone else took possession of the home, she'd be protected by the lease.
In fact, I'd be willing to bet that her current landlord would give her some rent concession for a long term lease.
Why not offer to enter into a two year lease and ask for a $200, $100 per month rent reduction?
The lease should mention any current deposits.
Why would anyone want to exist month to month like a monkey on an organ grinder's string?
If it were me, I'd seek a lease.
Even if he gave her no rent concession, she'd be secure, no matter what happened to the deadbeat owner!

See that's the funny thing, he actually just informed her a couple weeks ago that he was raising the rent $150 more a month, and refused to do a new month to month agreement or an actual lease(she wanted something in writing stating the changes such as a lease). He informed her via e-mail. I told her not to pay a penny more unless he does some sort of new agreement in writing, rather than him just sending an e-mail.

MorgansDaddy said:

See that's the funny thing, he actually just informed her a couple weeks ago that he was raising the rent $150 more a month, and refused to do a new month to month agreement or an actual lease(she wanted something in writing stating the changes such as a lease). He informed her via e-mail. I told her not to pay a penny more unless he does some sort of new agreement in writing, rather than him just sending an e-mail.

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All very, very strange and inexplicable, to say the least.

Your advice was on point.

Maybe her best recourse is to serve notice and move?


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Yeah, I think she is starting to look at that option. I told her she may as well also kiss the security deposit good bye as well. Not like she will ever see a penny of it even if she won a judgment in small claims court. If he can't pay his bills, I doubt he still has it in saving or something like he is supposed to.

MorgansDaddy said:

Yeah, I think she is starting to look at that option. I told her she may as well also kiss the security deposit good bye as well. Not like she will ever see a penny of it even if she won a judgment in small claims court. If he can't pay his bills, I doubt he still has it in saving or something like he is supposed to.

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Good advice. You gotta know when to fold 'em.


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Senate Bill 896 allows her to stay for 90 days after a foreclosure even if she is on a month to month tenancy.