RISMEDIA, Dec. 5, 2007-Sixty-seven-year old Sharron Shagonaby was looking forward to a quiet Christmas at home – a home she has rented for more than a year, and has never missed a rent payment. Now, thanks to her landlord, she has just five days to get out – a hidden victim of the foreclosure crisis. What should tenants be doing to protect themselves?
“One of the hidden casualties of the foreclosure crisis are the tenants.” says Chip Cummings, CMC, a 25-year mortgage industry veteran and author. “When the landlord doesn’t make the mortgage payment and goes into foreclosure, most leases are worthless, and even the best renters are being hit with eviction notices.”
Statistics show that just over 20% of all foreclosures are rental properties, and in almost every state, a foreclosure trumps the lease – and without warning, tenants are being evicted in as little as 3-5 days. So what can renter do to protect themselves? Here’s a few precautions they can take:
– In all cases, notice of the foreclosure must be served on the property. Look for notices posted on doors, and if suspicious, check with your county for a filing notice of the foreclosure action.
– Ask for a credit report on your landlord, or at least three credit references to be satisfied that they are making their payments. Check for overdue utility bills or notices. Look for deferred maintenance on the property. Even small items that have been ignored could raise a red flag for a foreclosure action.
– Is the property all of the sudden for sale? Check with the real estate agent to find out why they are selling and how motivated they are. Be wary of deep-discounted listing prices and incentives. Check your rent checks to see if they have been assigned to a third-party agent in recent months.
– If you are aware of a foreclosure action on the property, don’t pay the landlord – pay your rent into an escrow account and contact an attorney who specializes in foreclosure property issues.
– File a legal action against the landlord for “non-performance” on the lease, and try to recover expenses, damages and the costs of relocating you incur as a result of the foreclosure.
– Call the new owner (the foreclosure lender) directly, and try to negotiate a short-term lease and offer to protect the property for them while you search for new housing.
Cummings is the author of “Mortgage Myths – 77 Insider Secrets to Saving Thousands on Home Financing.” A 25-year mortgage industry veteran and international speaker, he has been interviewed on Fox News, NBC, numerous radio & print media, and has authored dozens of articles.