Tenant refuses to pay rent - home in preforclosure

[Wyldrush]

What is the name of your state? Fl

My friend has a home in the very begining stages of foreclosure. Just served with his 20day letter and has not even responded yet to the lawyers office. Well the home is rented and they also went by the home and told the tenants that home in foreclosure since originally they went there to serve papers.
Now the tenant does not want to pay the rent since they have a lease for 1 yr which started in July 07 thru June 08. They paid 1st/Last/$1000 security. Rent is $2100 a month.

If tenant does decide not to pay, he can still do eviction for non-payment. Tenant is concerned since he is not paying mortgage and pocketing money. He decided to let home go because he is losing $400 a month on mortgage but now has a $9600 tax bill due and the insurance premuims raised he was told. In March the insurance renews and is going from $3800 a yr to $8300 and he can not afford this plus taxes as his insurance policy has been sold from the state backed insurance company to a private company buying the policies which are more b/c of there rating factors which is legal.

He knows foreclosure will probably take another 4 months and like to keep some money so the $2100 a month helps alot. He figured home will be short saled at end anyway and new owner will have to honor rental lease till over, unless the bank steps in and evicts tenant during short sale process ( I have heard at times the banks wanted the house vacant from renters b/c of this thing)

Any advice?? Should he just wait till the 4th, post 3 day letter and then file eviction and look for a short term month to month renter. Renter is crazy lady but pays on time and does not understand whats going on as we tried to explain. She feels she can live free if he is not paying mortgage which I tired to explain him not paying has nothing to do with you not paying.

 

[Cvillecpm]

Homeowner "friend" should be paying their mortgage if they are collecting rent - why aren't they paying the mortgage.

 

[Who's Liable?]

Homeowner "friend" should be paying their mortgage if they are collecting rent - why aren't they paying the mortgage.

what's done is done...

OP needs to file for eviction due to non-payment of rent once the new rental period begins and the tenant has failed to pay rent. Send the a 3-day notice to pay or vacate per your states LL/T laws.
You are correct, the tenant still has to legally pay rent even though the house is going through foreclosure.
There is no free lunch.

 

[OHlandlord]

Legally the tenant must continue to pay the rent to the LL until the house is no longer owned by your friend. The friend can pursue eviction as long as he is still the owner of the house. (But if he doesn't have the money to pay the mortgage, will he have the money to evict?) And finding another tenant for a short-term month-to-month rental for $2100 per month will be nearly impossible!

However, why not work out a deal with the tenant allowing her to use the last month's rent that she paid as rent for this month. (I would never suggest this in any other situation than a sure foreclosure! And the owner sounds as if he wants this house to go to foreclosure.) But, that would keep the tenant through February. Then in March, if there is an actual foreclosure court date, suggest she use the deposit's $1000 and make up the difference. Your friend would have had to return the deposit to the tenant anyways, this way he does not have to return any money. Since your friend will lose the house well before the lease is up, there's really no need for security against damages. In return the tenant actually paid for the two months she was there. If the tenant vacates at the end of March, she will have had 2 months to save money for rent and deposit at her next place. (Just planning to keep $2100 per month with no effort to pay the mortgage isn't right! - IMO That tenant is not a paycheck!)

Most states make a lease null and void when a house goes to foreclosure. And there is no guarantee of a short sale (if so, why isn't your friend working on that right now?) So the tenant will probably have to move in 3-4 months just the same. This way, the tenant can stay for 2, save money to find another place, and the owner doesn't have to refund her anything. Since I doubt the owner has the money to evict, this is about the best solution for both of them.

 

[Wyldrush]

Thanks for some of the advice.

The owner is letting home go because his mortgage was negative $400 a month but then taxes and the new insurance bill will make it impossible to keep. Plus SoFl market took a dump. He got stuck with this home when he bought it with a partner who screwed him on selling it so then he had to refi to keep his credit good since partner didnt pay mortgage like agreed. Now his credit is going. He sunk alot into the home while trying to refi and never did get that money back plus paying for the rest of the rehab that partner didnt pay for. Whole other issue there.

In Nov he decided to let it go. But remember you need to get behind 3 payments to start foreclosure process and do short sale. So no payment in Nov, Dec and Jan and now Feb. So 3 month. They are nowing sending the letter in which he has 20 business days to respond to to answer the complaint (foreclosure process). No dates been set and it will probably be at least 3-5 months before it gets to the end. Chances are lease may even get finished or shy by a month.

He is keeping money because he will utimately lose the home and about $30K invested. He just wants to try and recover some of the money he lost along with credit.

As I say..Better to have cash in the bank and poor credit then poor credit and no cash in the bank... He is going with my saying really... and I do not blame him. To many people keep paying and paying only to lose the home.

As for short term rental..Easy in SoFl and still snowbird season so in fact, on a short term rental, can probably get $2500-$3000 thru April.

My advice was to serve 3day letter and evict. It cost about $190 to evict in SoFl. He has money, not broke....but doesnt want to lose all his money.

 

[Alaska landlord]

There is no free lunch.

At least not until the Democrats get into the oval office.

 

[Who's Liable?]

At least not until the Democrats get into the oval office.

even than, there is no free lunch... You and I would still be paying for that "free" lunch...