In the good old days, a tenant could be pretty sure that if they continued to pay their rent on time and took good care of the property that they’d have the right to continue living in the property for the duration of their lease and then receive a refund for their security deposit upon vacating the property at the end of the lease. The current market has introduced a new potential complication that every renter needs to know about and take the necessary steps to protect their interests. What is happening too often now is that landlords are collecting rent checks from their tenants; but not paying their mortgages. When this happens, the bank will foreclose on the landlord’s rental property; potentially leaving the unsuspecting tenant who has been paying their rent as they are supposed to out in the cold, literally. So what can be done to prevent this from happening to you? For starters, before you sign a lease with a landlord, it’s a good idea to ask the right questions to make sure that the landlord is current on their payments and is likely to have the capacity to continue to do so. I have seen some tenants go as far as insisting that they make their payments directly to the owner’s lending institution; but good like finding a property owner who’d be willing to agree to that. At the very least, research can be done to investigate how much the property owner owes on the home. If you are renting a home in which the landlord has a significant amount of equity in the property then this would be much less likely to become a problem. However, if you are renting a home from a landlord that owes 100% or more of what the property is worth, you might want to proceed with caution. Additionally, you will be protected better if your deposit is being held in a designated trust account by a property manager / broker rather than being intermingled with the landlord’s funds. Licensed agents and brokers are required to do so; but if you are renting a by owner property from a landlord who is not a licensed real estate broker or agent, you might not be as protected. So before you sign that lease, be sure to evaluate the situation in the light of the current market or better yet, utilize a good real estate professional to help protect your interests.
June 29th, 2009 at 3:43 pm
Very good information. Thanks for letting me know about this to help me in my foreclosure problems.
August 22nd, 2009 at 6:00 pm
Great site, I will be checking back for any new articles and linking back to you from my site.