Expert: Lisa Webber - 6/13/2009

Question
My question is when my landlord property is in a short sale do I have to pay them rent. It doesn't seem fair that they can collect rents from tenants and than not pay the mortgage. You cant do this to people. And also how will I know when it becomes the banks property if it forecloses?

Answer
Are you still under a lease?  There are a lot of things that can happen in your situation.  If the property is being sold as a short sale, the owner may still be paying the mortgage so it may not actually be in pre-foreclosure status.  You don't necessarily have to be late on your mortgage to request a short sale but you have to have a financial hardship and be in a position where you won't be able to afford the mortgage in the near future.  

That being said, most people who are requesting short sales are requesting them because they have lost employment, or have an adjustable rate mortgage that has adjusted so that they can't afford it. If you are in a lease, you are bound to pay the landlord the rent that you agreed to. You could choose to break the lease but then the landlord could come after you for the balance of the lease.  

Morally there are so many issues involved with landlords who are in pre-foreclosures and tenants.  I'm not a lawyer so I cannot give you legal advice, but if your lease is over and you are in a month-to-month lease, you need to give your 30 days notice and move out.  If the short sale is not accepted by the bank for any reason, the bank will foreclose on the property.  I have seen situations where the tenant gets a notice taped on their door from the sheriff that the sheriff will be back in a week to ten days to change the locks and evict them. That is the only notice they received. You don't want to be stuck in that position where you have to find a home in a week.

There should be more protections in place for tenants like yourself, but I don't know of any.  I highly recommend that you move as soon as you are able, either at the end of your lease or now if you are in a month-to-month situation.

I hope this helps - good luck to you!