Tenants refusing to pay rent due to property in foreclosure

[JM4evr]

Our issue is a little odd. We are the owners and landlords of a single family home. We were building a new house in 2005 and listed our current property for sale. It did not sell, and so being crunch time, we decided to rent it out instead. We advertised as a one year lease to own. One very nice family who were interested asked if we would do a 3 year lease to own since they still had a bankruptcy on their credit and wouldn't be able to purchase it in a year. We reluctantly agreed since they were the best candidates, even though our mortgage payments were $500 MORE than the rent we would be receiving. That meant 3 years of paying extra instead of one. We could handle it at the time, so we agreed. As an extra incentive for them to purchase the property at the end of the 3 years, we wrote in the agreement that we would credit them $300/month toward the purchase price. This was not money we were going to set aside for them, because of course, we were already paying an extra $500/month, but we would credit the purchase price for that lump sum. The agreement stipulated that if they could NOT purchase the home at the end of the 3 years, they would forfeit the credited amount. Well, almost 3 years came, and they notified us that they STILL couldn't qualify to purchase the property and asked if we could extend the contract, knowing full well that they would forfeit the credit. So, in early 2008, we wrote and signed a 'month-to-month' lease agreement. They still really wanted to purchase the home, but just couldn't, so renting it and keeping their family there was more important than the credit. Our finances caught up to us in early 2009, and we had no choice but to file Chapter 7. We could have asked them to leave, but we felt bad, and knew they really wanted to eventually purchase the home, so instead of evicting them and selling the property outright, we included the property in the bk, not knowing that the mortgage company would file for a stay and it would not be included. So, even though we had been discharged, we were still left to deal with the property. It was a hard house to sell... nothing fancy, and with the housing market, we decided to let them stay and just let the property go. We notified the tenants of the foreclosure right away when we decided to file. We told them they most likely had a year until it was all said and done. We went through the 6-month means test process of keeping track of income, not to exceed $xxx. Once the 6 months was over, our lawyer filed Chapter 7. We did NOT include the monthly rent in the projected income/expense form because we knew it would not last too long. During the two months waiting period after filing, we held on to the rent checks. We didn't know if we'd have to give them back, or if the mortgage company would ask for them. Once everything was discharged, we asked our lawyer about the rent... he said just do with them as you see fit. So, realizing that for years, we paid MORE than the rent we received for our mortgage payments, we really had no trouble putting the rent money back where that came from... US. Again, we knew it would not last. Well, once our tentants did some checking with the mortgage company, not sure how, and they determined we were NOT paying the mortgage, they decided to stop paying us. I really don't understand their mentality because they were still living there the entire time... do they just think that they should get a break and live there for free, even though WE're the ones getting the foreclosure on our credit, and WE're the ones dealing with harassment... If WE were living in that property while it is in foreclosure, then WE would be the ones with the extra cash because WE're taking the hit on our credit... why should they get the break? So, for the months of June, July and August, they refused to pay. The initial court date was May 5th, and the docs said that it would be at least 90 days until something further happened, so, according to our contract with them, I had to send them a 30 day notice to vacate. So, in late June, I sent a certified letter letting them know that they would need to vacate by August 1st. She sent e-mails telling us we were fraudulent in how we handled the rent, and on and on. I had not heard anything for many months about the status of the property, and in all truth, I was thinking that they made a deal with the mortgage holder and was actually paying the payment since I wasn't getting any more monthly statements. Well just the other day, our realtor, who had listed it before, called and said she had some people interested in purchasing it if it was still available. I told her I didn't know where we stood with it, but I would call the mortgage company. They said it had been sold back to the bank at a sherriff's sale one week ago, and that we could still retain it if we paid the amount due within 3 weeks. So, we sent another certified letter to the tenants letting them know that according to our contract, we had the right of access by giving 2 days notice and that someone wanted to see the property next week... I had enough with her, so I gave her our realtor's number. She called her and said she was not doing us any favors, and since it was sold back to the bank, we no longer owned it, and therefore had no right of access, and she wasn't letting anyone in to see it. After all we did for them to keep them in the house, she's treated us like crap. I told her we wouldn't sue for unpaid rent, although I stated in the June letter that they were in breach of contract for unpaid rent. If we have any more trouble, I'm very tempted to sue for unpaid rent of $4500. My question is... how will a judge view the receiving of rent even though we were not paying the mortgage during the foreclosure process? Do we have a case? Sorry for the very long story... but it is just that!!! Any advice would be greatly appreciated!

 

[fenfen]

Hi,

Sorry, I don't have any advice, but I was wondering what was the outcome. We are currently going though almost the exact situation and would love to hear how it ended and what you did to deal with it.

Thanks!

 

[jacksgal]

Hi,

Sorry, I don't have any advice, but I was wondering what was the outcome. We are currently going though almost the exact situation and would love to hear how it ended and what you did to deal with it.

Thanks!

You might consider posting your own question as this OP wa slast here in 2010. Its unlikely they will return now to answer your question