Avoid Devastation When The Landlord Forecloses on Your Rental Home

It is no mystery that the economy, and the real estate market in particular, have not been kind to working-class people. While most of us have been touched in one way or another by the economic slowdown, some folks have strung together a particularly bad streak of luck. Take John and Jennifer from Huntington Beach, CA. John is an auto salesman and Jennifer worked as an administrative assistant at a local manufacturing company.

Like many Americans, John and Jennifer were both laid off months ago and lost their home to foreclosure. After getting themselves together, they found an affordable rental condo with a very attractive monthly rental price and a landlord willing to overlook their bad credit. This is where things went from bad to worse.

Three months into their tenancy, John and Jennifer received an interesting notice at their front door addressed to the owner. The mail was a postcard from some company stating that they could save the house from foreclosure. Without giving it a second thought, the two went on living their normal lives. One morning in the not too distant future, another notice was left at their door. This one looked more official and said they had sixty days to vacate the property. Sixty days later, the sheriff showed up and informed them that the house had been foreclosed on and they had to leave. We can all imagine the panic and heartache a situation like this so we’ll refrain from the details. Regardless, this is a situation that all tenants and renters need to understand and know how to avoid.

There Is A Way To Check Up on Your Landlord

Fortunately, the characters in the above scenario are fictitious although the scenario certainly is not. The silver lining is that we can use this bad experience to not only help those who’ve experienced this, but also those who haven’t yet. As stated earlier, there is a way to check on any home in California to know whether the owner is making the payments and/or whether they have a trustee (foreclosure) sale scheduled. As a tenant, this information can be priceless whether you currently live in the property or are just looking at a prospective rental home.

Build A Relationship With A Real Estate Professional

Life is all about relationships and some of these, although strange at first, will pay huge dividends in your lifetime. As a tenant, most think they have no use for a Realtor until they are in the market to buy a home. We’re hoping that the counties will arrange a way to quickly check and make sure that your landlord is current in their payments, until then, a tenant’s best friend can be a strong working relationship with a great Realtor. Tenants need representation and contacting an agent in your area is a good way to build that relationship.

Not only can Realtors help a tenant find a rental home and negotiate a fair lease, but maybe more importantly they can physically check to see if there has been any notices of default or trustee (foreclosure) sales scheduled. The Realtor probably will not charge you for the service as long as its only an occasional check and you operate on a promise to either use them when you decide to buy a home or refer your friends, family, and co-workers when they do. Either way, this relationship will provide peace of mind for you as a tenant and give the Realtor the satisfaction of helping a future homeowner.

What You Can Do If Your Rental Home Is In Foreclosure

If a tenant does find that the property they occupy is in foreclosure or the owner is behind in payments, they have a limited amount of recourse but at least they can plan for a new move. If they are under lease, they still have a contractual obligation to pay the rent amount regardless of whether the owner is making payments. However; according to new law, at least when we are talking about California leases, contracts extending beyond the foreclosure sale date will need to be honored by the new owner at the original lease terms until the contract expires.

Regardless, upon first discovery, tenants need to take immediate action and confront the owner about the situation. If an arrangement can’t be agreed upon, a good idea would be to have your Realtor contact them and express concerns for his/her client, you. If the owner is reaching the point of no return with regards to making the mortgage payments and is not concerned at all with letting you out of your lease, the tenant should probably seek legal counsel.

A letter from an attorney has had good success in rectifying the situation although it may cost you a few hundred dollars. If the renter has only a month-to-month agreement, it may be wise to give notice immediately and start looking for a new place. Taking precautions such as these should help tenants get on their way towards finding a new, not in default, rental without throwing them into the last-minute sheriff scramble.

About the Author: Todd Foust is the chief marketing executive for the FOUST Team at C21 Discovery; one of the top-selling real estate teams in Southern California. He specializes in Orange and Los Angeles Counties and operates one of the area’s most informative real estate websites. To contact him or learn more about Huntington Beach Real Estate, please visit FOUSTonline.

Written by Todd Foust for www.RealtyTimes.com Copyright © 2009 Realty Times All Rights Reserved.