It is estimated that another 1.2 million properties will enter foreclosure in the next 12 months. Of those, an estimated 24% will be investment properties where landlord owners simply walk away. The problem isn’t just in the foreclosure, it’s in the victims – families that live there, and have been paying rent all along.
Recently, an 84-year old grandmother was evicted from the home she has rented for almost 8 years. She wasn’t evicted for not paying her rent, instead she was evicted because her landlord simply didn;t make the mortgage payments – even though she hadn’t missed a single rent payment! It has gotten so bad in Cook County Illinois, that the Sheriff there simply stopped enforcing evictions!
“This simply isn’t right!” exclaimed a 23-year old tenant, Cheryl. “I have two kids and nowhere to go. They have given me all of 4 days notice to get out”
So what should renters do to protect themselves? First, pay attention to notices posted on the property. When a property goes into foreclosure, a notice has to be posted in most states at the beginning of the foreclosure process. If you see an official looking notice – READ IT! If the property is in default, contact an attorney or the county recorders office to research whether the property is entering foreclosure status. Since foreclosure is a public action, all the records will be available.
Most states provide for a “redemption” period in which a property’s mortgage payments can be brought current. During this period, it might be wise to search for anotehr place to live. If you recevied no notice at all, contact your local city or county housing authority, or an attorney to find out what rights you may have. I recommend putting any rent payments into an escrow account until you know what the staus of the property is, and whether it gets redeemed out of foreclosure.
- If you are considering moving into another rental property, here are a few things you can do to avoid problems if that real estate is on the brink of foreclosure:
- Perform an online seaerch of the property. Most countie have online record databases you can check.
- Perform an online search of the landlord. Any court cases, filings, disutes or claims against the landlord or management company will give you an idea what your up against.
- Ask your prospective landlord for a credit report. They get one on you – but nowadays, you really need to check them out just as completely.
- Find out what your lease says about non-performance on the part of the landlord. Can you break the lease if the property goes into default
Unfortunately, there are very few laws on the books to help tenants. Only two states, New Jersey and Washington DC currently have laws that are designed to substantially protect tenants from landlord rental or investment property foreclosure. Many have been proposed, and will follow, but for now it’s tenant beware! You’re on your own in most cases.
These are just a few of the strategies I cover in my best-selling book “Foreclosure Myths – 77 Insider Secrets to Saving Thousands on Distressed Properties”, complete with a checklist of what to look for in the county filing records. Don’t bet on the sheriff to save you!
Don’t become a victim of rental foreclosure. keep your eyes and ears open, and watch out for falling landlords!
Renters and Tenants Become Latest Victims of Real Estate Foreclosure Mess
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