This is a question that I have seen coming up more and more recently. I represent a lot of first time buyers and families that have moved here from other areas that are currently renting now. One of the biggest questions I have received lately is they have received notifcation that the home they are renting is going to foreclosure.....are they obligated to pay the rent still; if the landlord stopped paying the mortgage?
This is an easy question to answer. YES. Each of those transactions are independent of one another. The landlord (owner of the home) has a contract with the bank to pay a certain amoutn each month. If he defaults on that the bank can, and will, sue him for breach of his contract and take the home over via foreclosure. However; his mortgage is not tied into you paying the rent each month. there is no clause that says as long as the rent is paid he has to pay the mortgage.
The same goes true for you. You have a signed lease agreement with the landlord (owner) of the property. Just because he has defaulted on his mortgage does not entilte you to not pay the rent. Unless your lease agreement specifically reads that your payment of the rent is subject to the landlord beign current on the mortgage; you have to pay until the day he does not own the house anymore. Just as the bank can sue the landlord for not paying the mortgage; the landlord can sue you for not paying the rent.....
It does NOT matter if he has not paid the mortgage payment. I just had a client who bought a house from me a few months ago that got sued by the landlord for breach of his lease agreement. Eventhough the landlord eventually let the house foreclose on; my client failed to pay the rent when he found out it was being foreclosed on. (for the record I did not advise my cleint of doing that). He lost in court and has to pay the ex-landlord back rent PLUS court fees.
So be careful if, you receive a foreclosure notice at your door because the landlord has not been making the mortgage payments. it does not preclude you from not making the rental payments.... Consult an attorney before yous top making the payments.
Dave diCecco
Realtor/Broker
www.davedicecco.com
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