Rental house is being foreclosed..please help!

[tpatte02]

What is the name of your state? CO

My fiance and I moved into a house and signed a two year lease on March 1st, 2007. We paid $1600 security deposit, $500 pet deposit and first month's rent. We have paid rent again for $1500 on the 1st of April and the 1st of May. Around the middle of April we received a letter from a law firm telling us that the bank was filing a foreclosure against the owner of the house and a hearing would take place on May 9th..he had until May 4th to file a counter claim. This was the first we learned that the landlords were not the owners.

We called them and they admitted this fact and said they would contact the owner. They got back to us and said everything was ok and he was working with the mortgage company. He called us back the following week because we had inquired about purchasing the home but we had decided to not go forward at this time. He AGAIN told us everything was fine. That same conversation we asked him to send us in writing a letter saying that they allowed us to have pets and we had paid a deposit (we looked over the lease and thought that was the only thing missing). He said ok and would fax it by the end of the week.

That weekend we received notice that the house was being foreclosed and the Public Trustee Sale would commence on June 20th. We called the landords on Monday and they finally called us back giving us two "options".

1. They give us $1500 back in security deposits and we live in the house until June 30th along with not having to pay rent for the month of June.

2. We pay June rent and stay at least until the 20th. We then either have to move out b/c and individual bought the house or and invester bought it and would maybe honor our lease or draw up a short term lease.

In our lease there is a clause that says if they plan to sell, demolish, or do anything to the house we get 6 months advance notice to leave in writing. Another clause states that if the house is sold or ownership is transferred the new honor has to honor our existing lease or give us 6 months advance notice to leave.

What options do we have? The landlords aren't the owners..they will not provide us a copy of the authorization from the homeowner to rent the property and act on his behalf. We JUST moved in two months ago and incurred costs for leaving our previous lease early (which we worked out in a professional manner that satisfied all parties), moving into the house, and now the stress of having to move again, plus incurring additional costs for moving, etc. I thought leases were legal binding contracts that would mean the landlords were in default because the promised us possession of this house for two years. Please any advice/help would be greatly appreciated!!!!

[Cvillecpm]

Make sure the law firm representing the bank knows that there are residents in the property. You should write them a letter with a copy to the landlord/property owner.

DO NOT PAY ANY MORE MONEY to the landlord...the rent you are paying is only going into the landlord's pocket and is not going to the mortgage that would enable you to stay for the remainder of your lease. "LIVE OUT" your security deposit at the property until it goes into foreclosure and is sold. The bank most likely will NOT HAVE to give you any notice; however, they may give you 30 days as your lease will be void as of their taking over the property/title.

Start looking for another rental property as of mid-June or July.

[LindaP777]

Sorry, in the case of a foreclosure, you lease becomes void.
If your LL is willing to return you security deposit and free rent for June, take that option (get the $1500 back!).
If I were you, I would probably continue to live there as long as I can (do not pay rent) - you will receive notice to vacate from the new owners after the sheriff's sale. More than likely, the bank who is holding the mortgage will buy the house back at the sheriff's sale. If this happens, it's the best possible scenario for you. Most of the time, banks will pay you (in this area, $1000 - $2000) to move peaceably out of the house.

[acmb05]

Originally Posted by LindaP777

Sorry, in the case of a foreclosure, you lease becomes void.
If your LL is willing to return you security deposit and free rent for June, take that option (get the $1500 back!).
If I were you, I would probably continue to live there as long as I can (do not pay rent) - you will receive notice to vacate from the new owners after the sheriff's sale. More than likely, the bank who is holding the mortgage will buy the house back at the sheriff's sale. If this happens, it's the best possible scenario for you. Most of the time, banks will pay you (in this area, $1000 - $2000) to move peaceably out of the house.

How true it is. The bank will send a notice to the home stating it has been sold at public auction. They will list a phone number and other contact info and say in the notice that you could get some money if you move out before a certain date. DO NOT HESITATE TO CALL. The only problem you may have is that you are not the owner, but a renter. The owner has more incentive to try and stay in the home as long as possible, and the renter can just be kicked out with no compensation at all.

Take the $1500 if they are offering to give it back to you. Then you can stay in the house until you get notice that it sold and possibly the money to move out.

[tpatte02]

Thank you so much for all the replies!!!!

My only other question is this:

The landlords are wanting to draw up a contract for either of the options we choose..obviously, #2. If we sign this contract saying they will refund us $1500 and allow to stay in the house until June 30th then that would void our lease. I thought the clauses in the lease that stated the new owner of the house would have to honor our lease would hold up in court....why wouldn't they?

Also, we will be demanding a cashier's check for payment of the security deposit..is that wrong. If the owner can't afford to pay his mortgage we aren't going to accept a personal check.

Thanks again for all responses!

[acmb05]

Originally Posted by tpatte02

Thank you so much for all the replies!!!!

My only other question is this:

The landlords are wanting to draw up a contract for either of the options we choose..obviously, #2. If we sign this contract saying they will refund us $1500 and allow to stay in the house until June 30th then that would void our lease. I thought the clauses in the lease that stated the new owner of the house would have to honor our lease would hold up in court....why wouldn't they?

No because the foreclosure laws very widely from the LL/T laws

Originally Posted by tpatte02

Also, we will be demanding a cashier's check for payment of the security deposit..is that wrong. If the owner can't afford to pay his mortgage we aren't going to accept a personal check.

Thanks again for all responses!

Or you can accept CASH.