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Lease null & void due to possible foreclosure

Discussion in 'Deed in Lieu of Foreclosure - Do You Need Help to ' started by krstfr, Apr 5, 2012.

  1. krstfr

    krstfr LoanSafe Member

    Here's a confusing one. Hope someone has gone through this and help out. We left our condo and rented it out to a deadbeat renter (didn't know she was) so we can pay HOA. There is a date for auction on 4/30. The lease was until 7/28. She's now saying that this is null and void and she won't be paying anymore since the trustee told her she can only stay 60 days after auction. We were in the process of filing ch.7 and it was filed on the 31st of March. I don't want the auction to stop but I'm pretty sure the filing may put a hold on this.

    Does anyone know what happens to the auction since the papers were filed?

    Thanks so much!
  2. RyanJP

    RyanJP LoanSafe Member

    The bank will not be able to proceed with the sale until they obtain a relief from the automatic stay. This could be 30-60 days from the date you filed. Most likely, the 4/30 auction date will be cancelled and rescheduled.

    Also, I believe there is a *federal* law in place that says a new owner must either honor the current lease, or if there is no lease (i.e, month to month rental) they must give a tenant 90 days notice to vacate. The ONLY exception is if the new owner intends to live in the unit themselves.

    Your renter doesn't have any legal standing to refuse to pay rent and is, in fact, legally required to pay. You could file a notice to vacate for failure to pay rent if you wanted to. Even if you don't intend to follow through because of cost, threaten her with eviction proceedings. An eviction on her record will make it hard for her to rent in the future. Filing the paperwork by itself will create a record that other potential landlords will see, even if you drop the suit.
  3. Cat Damiano

    Cat Damiano Mortgage Wars

  4. krstfr

    krstfr LoanSafe Member

    Thank you for the info. I did call the trustee and due to the ch. 7, they said the date will be moved after the discharge. Our tenant insists on listening to the Trustee/ bank rep. She insists that the rep., will be advising her on what to do with her lease and if our late fees to her non payment, would even apply. I didn't know these bank rep's can even offer legal advice on how and when to make payments to us.
  5. RyanJP

    RyanJP LoanSafe Member

    They can't. You are the property owner, and you can evict them for non payment of rent. The bank has absolutely NO say in the matter until the foreclosure is complete and they take ownership of the property.

    The Trustee doesn't have any say in the matter either, except how rent will be applied to your BK7 calculations.

    Since your tenant is being unreasonable, I would seriously consider filing eviction papers on her. Inform her that if the eviction proceeds, you will seek a judgement to collect the missing rent via wage garnishment. This will be TWO highly negative entries into her credit report.

    Again, I would suggestion running this all by your lawyer. I assume that the rental income was included in your BK7 petition, so collecting the rent should be no problem. In fact, why not have your lawyer draft a demand for payment letter to the tenant? The letterhead of a lawyer will probably carry more weight than a phone call from you.

    Here's another thing to consider... The Trustee will be asking you if anybody owes you money. You will say yes and name your tenant and the dollar amount of the unpaid rent. The Trustee could choose to go after that money himself... At that point, the tenant will REALLY be screwed.

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