My new lease was signed after landlord signed a short sale contract.

[povelniu]

What is the name of your state (only U.S. law)? Chicago, Illinois

The building I am renting an apartment in is being on the Short sale. The Short sale contract was signed in August 2012. My new lease was signed in November 2012. Since my new lease was signed after the Short sale contract, I wonder if it is valid. The buyer is not aware about my new lease and is not planning on renting. They have scheduled to close the sale in May 2013. Will I be able to stay in my apartment till the end of my new lease, or the new owner will have the right to suspend/invalidate my new lease?
My current landlord reduced the rent by $100 in the new lease as a token of being an honor tenant for 6+ years, but I agreed (verbally) to keep paying him a full rent until the sale. If he is screwing me up and my new lease is not valid, can I reduce the amount I "overpaid" with my last payment to the old landlord? The expiration date of the new lease is at the end of 2014. Thank you.

 

[justalayman]

Ownership doesn't transfer until the deed is signed and transferred. Until that point, the current owner can make contracts as the desire. Now, where the problem comes in is since that does change the circumstances concerning the property at the time the deal was made, the buyer could balk at completing the deal.

You owe the current landlord exactly what your lease says you owe him.

 

[povelniu]

Ownership doesn't transfer until the deed is signed and transferred. Until that point, the current owner can make contracts as the desire. Now, where the problem comes in is since that does change the circumstances concerning the property at the time the deal was made, the buyer could balk at completing the deal.

You owe the current landlord exactly what your lease says you owe him.

The buyer told me that I should start looking for another place. Should I inform the buyer about my lease?

 

[justalayman]

If you plan on attempting to enforce the lease, I surely would. The fallout of the situation if he doesn't find out until after the sale may be something you do not want to be involved in, especially since it is purposely made to benefit you at the injury of the buyer.


The other thing I was going to say is; just because there is a contract doesn't mean the sale will come to fruition. There are many pitfalls that could knock the sale off track.

My current landlord reduced the rent by $100 in the new lease as a token of being an honor tenant for 6+ years, but I agreed (verbally) to keep paying him a full rent until the sale.

Given that statement, it becomes quite clear the intent of your lease. It is obvious your landlord had no intent on reducing what you are paying him. It was simply to provide you with a reduced rent payment once the new owner took possession. Sounds pretty shady to me.

The expiration date of the new lease is at the end of 2014

seriously? You signed a 2 year lease? I would put dollars to donuts the buyer will seek a rescission of the contract. Then you can enforce your lower payment lease with the current landlord. Is he in jeopardy of losing the property to foreclosure?

 

[povelniu]

Yes, he will be losing the building either way - through the short sale or through the foreclosure. If the buyer will seek a rescission as you say, what are my chances or his chances to succeed? Is it better for me to inform the buyer? If he will close the deal anyways and will seek a rescission, I would be able to tell a judge that the buyer knew everything about the lease: the rent amount, the expiration date, etc.

 

[justalayman]

A curious question; are you privy to the details of the purchase agreement? If so, how was your tenancy addressed?

 

[povelniu]

A curious question; are you privy to the details of the purchase agreement? If so, how was your tenancy addressed?

I believe, the buyers thinks that all tenants are on month-to-month lease. But I am not certain. In fact, I have no idea how it was laid down on the paper.

 

[justalayman]

What is on the contract could be important. If the buyer stated the tenants would be gone before closing, then either they are gone or the sale doesn't close. The bank isn't likely to play around with this so the deal would likely fail. Then, if foreclosure is imminent, you have that problem. There is a law protecting tenants but I would guess your lease would be seen as an attempt to circumvent the law and as such, rendered invalid.

 

[povelniu]

What is on the contract could be important. If the buyer stated the tenants would be gone before closing, then either they are gone or the sale doesn't close. The bank isn't likely to play around with this so the deal would likely fail. Then, if foreclosure is imminent, you have that problem. There is a law protecting tenants but I would guess your lease would be seen as an attempt to circumvent the law and as such, rendered invalid.

So, my only hope to win some time is to seek a failure of the short sale deal by letting the buyer know about the lease, isn't it? I really need to stay for at least another 15 months - until my daughter will be done with a high school. Then I would move out of state anyways. My current landlord would not be happy though, for breaking the deal.

 

[justalayman]

So, my only hope to win some time is to seek a failure of the short sale deal by letting the buyer know about the lease, isn't it? I really need to stay for another year. My current landlord would not be happy though.

Your landlord is a co-conspirator in the attempt to set up this scheme. If he has a problem with it, maybe he shouldn't have done what he did.

 

[povelniu]

Your landlord is a co-conspirator in the attempt to set up this scheme. If he has a problem with it, maybe he shouldn't have done what he did.

Thank you so much. You are absolutely right, I have to protect my own interest.