Is Your Rental in Foreclosure?

It’s a rainy Saturday morning and I took a little time to read through some emails and browse the web. Though I was looking for ideas on updating my office, I ran across this great article and know many people that will appreciate the perspective. The blogger personally experienced this and her advise is pretty much spot on.

A few more things that I have to offer or reinforce:

As a renter, remember that in most states you lose all your rental rights the minute you stop paying rent.
As she pointed out, don’t get mad at your landlord. They have issues much more significant than yours. It is very hard for a landlord to determine when is the right time to tell renters about their situation. Remember that they are probably very embarrassed and they have more questions than answers.
Remember that good referrals are important as a tenant. A “foreclosed landlord” can still be a great referral for you as a tenant! And don’t be afraid to ask because they should at least owe you that.
Absolutely try to negotiate something with your landlord for reduced rent. However keep it reasonable and not totally out of line with market rents. Document the agreements (i.e. in exchange for market rental rate reduction of $200, tenant agrees to manage repairs up to $500, maintain yard, allow showings to perspective buyers…). Save that money for a deposit on your next place or down payment if you decide to buy. Work with them. Whatever happens, it could be months or even years before action is taken. An empty house is very SAD.
If the house is going toward foreclosure and you want to stay, make sure to keep the lease current and active. Don’t rely on the month-to-month default as a bank will come in and give you 45 days to be out. That is the easiest way for them to handle. If there is a longer lease, banks need to honor the lease unless the new owner will be occupying the property. The lender may try to compensate you (cash for keys) and may give you reasonable (90 day) notice to leave. More and more banks are actually allowing renters to stay in place because they have so much inventory in place. If that is the case, they will probably identify a property manager for you to deal with.
Know your rights. REVIEW YOUR LEASE AGREEMENT! In Hawaii, there is a landlord/tenant hotline that can provide you with information. (808) 586-2634, 8am – 12 noon, M-F except state holidays. Check out this site for more information.

Don’t make any rash decisions. None of us love the process of moving but you can make this positive for yourself by keeping a level head and knowing your rights.