The benefits of renting include not having to worry about maintenance of the property and not having to take on a mortgage, but you also have less control over your living situation. When a landlord fails to make her mortgage payments it has a direct affect on the building's tenants, and that effect is eviction. Even if a tenant makes her rent payments every month she doesn't have any rights when the building faces foreclosure, and there's nothing that states she'll even get her security deposit returned. Find out more about this increasingly common situation when you read more.
During the real estate boom (and the heydey of subprime mortgages) people were scooping up properties like second homes, investment homes, or rental property. Many of these hopeful investors' ambitions turned against them and have defaulted on their mortgage loans, making renters of those properties victims. According to RealtyTrac, a company that tracks foreclosures across the country, approximately 280,000 of the 720,000 foreclosed properties in the US are classified as "not-owner occupied." So, 38 percent of properties in foreclosure through the end of April were these investment-type properties.
While renters are innocent in these foreclosure situations, they have little to protect them from losing the place they call home and having to forfeit security deposits. Some states have begun introducing legislation that would protect renters from being evicted, but until something passes renters have to simply hope they won't be faced with foreclosure.
Milly
Kurt Geiger
Christian Louboutin
OMG, this happened to one of my mother's coworkers. Her and her husband were living in this apartment saving money for their home; there was a notice one day in the hallway and it was addressed to the owner. They opened this one b/c they saw previous ones there for him. It was a foreclosure notice with a date in which all tenets should vacate. They were devastated especially since they just paid rent and have been paying rent on time during the past three months on the foreclosure process. They are out of money and they had to scrape money together in order to move.
1So sad. This stems from that story on the news, right? Where the single mom with 8 kids has been forced out of her rental though she pays her rent on time. The dumb owner screwed up and now this poor woman has to pay. Grrrr makes me mad!!
2I know SO many people that this is happening to right now.... The one good thing that's come out of it for them is that they live there for months rent-free. (I'm not sure that's entirely legal though?)
3freegracefrom- a lot of tenets are unaware of foreclosure until it's time for them to move - the landlords still collect rent even though they know they are being foreclosed on.
4I never thought about it before but with this happening to so many people, I wonder if renters insurance would include a clause that protects the tenant from situations like this and if when they have to vacate the premises the insurance company would help them with a limited amount for moving expenses.
5I think I'm going to call GEICO and inquire.
This is so scary! We rent our condo from the owner directly...he is awesome and I am sure would never not pay the mortgage, but how scary! Renters are really vulnerable here. This is why you always have to have enough money stashed away to move at a moments notice. Be prepared for the worst...
6I assume this kind of eviction wouldn't go on your credit since you have nothing to do with it?
7This is pretty scary! It's good to know this though.
8bellaressa - I guess the handful of people I know in this situation were lucky to have found out about it. They could not get ahold of their landlords and so they just stopped paying them rent. They've been living like this for months now, because our court system has been so backed up with foreclosures lately that they haven't gotten around to foreclosing their particular mortgages yet.
9colormesticky - No.
Not unless you signed on the mortgage too for some reason.
10I've lost a couple of cool neighbors because of this. Renters whose home owner didn't pay his mortgage kicked out. Lovely.
11freegracefrom, I am so glad your friends found out and are able to save money before they are finally evicted. I know so many people that didn't have that luxury.
12wow i literally just got renter's insurance for my new apartment like 2 hours ago. i wish i had known and asked about this when i called them to set it up! i just called them back to inquire (geico), and they said any claim arising from "termination or cancellation of lease" is not covered!!!! yikes!
13this affects the elderly more than anything, alot of those people are on fixed incomes so they cannot afford a new place. its going to be really interesting to see the reprecussions of the real estate crisis
14this happened to my friends...but they knew about it and lived rent free for months. guess it worked out for them.
15This would be horrible to go through. I hope I could find out about the foreclosure beforehand so I could save some rent money for first,last and security on a new place.
16This happened to the family living across the street from my aunt and uncle. The neighbors were renting the house and the owner was supposed to be covering the water payments. While we were visiting my aunt, the neighbors water got turned off so they came over to fill buckets with water so they could flush the toilets. My aunt gave them whatever bottled water she had so they had water to drink and cook with. The woman said they were trying to find a new place because the house was being foreclosed on.
17This would be horrible!
18It seems that the only remedy to this is through legal action. Renter's insurance has a lot of gray area, and usually only cover very specified situations. However, this is clearly a breach of contract in which case the tenant could sue the landlord, however legal service is not free either...unless you can get an attorney to take it on a contingency basis. It really is an unfortunate situation.
19my situation is very unique ,my former landlord works for a major mortgage company and she has special knowledge of how this works.with that being said she was foreclosed on for non-payment and i had over 20,0000 invested in this house, never late paid early most of the time .i have a very large family and it was hard to find a home in such short notice .her attitude is you should have had more savings in case this might happen.is there anyway to sue for mental anguish to this type of thing.
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