Rental Property advice

[ssmdem]

the tenants in my rental property had 3 months left on their lease when I defaulted on my mortgage. My attorney advised me to stop collecting the rent if I wasn't paying the mortgage as that could be consider fraud. I notified my tenants about the situation then I stopped collecting the rent and told them that they were welcome to stay until the lease expired, but could move earlier if they needed too. I hoped that the three months free rent would help them with getting into another place.

If you feel that your landord didn't disclose the rental income or accounts on the bankruptcy petition then you could always report that as bankruptcy fraud.

http://www.justice.gov/ust/eo/fraud/

Just curious what your tenants decided, as this is essentially what we plan to do as well. I'd almost LIKE for her to stay rent free as I know she needs the cash.

[ssmdem]

I'm nervous to contact the trustee because I don't want her to get upset and decide to give us a 3 day notice. Then we'll really be up the creek.

How can she evict you if you're holding up your end of the lease? You're paying the rent - I wouldn't think she could. At any rate, not 3 days. I know our lease has a 30 day clause if we sell the property, so I would think at the worst, she couldn't evict you sooner than 30 days.

[matababe]

Yea, about that automatic stay... Motion for Relief from Automatic stay was granted.

And I'm not talking about the trustee kicking us out, I'm talking about the landlord catching wind of the situation and kicking us out.

ssmdem, that is a very noble thing of you to do. I commend you for what you are doing.

I really appreciate all of your responses as this is a very trying point in my life, as other things not related to this are going on. When it rains, it definitely pours.. now I'm just trying to find that silver lining...

[ssmdem]

Yea, about that automatic stay... Motion for Relief from Automatic stay was granted.

And I'm not talking about the trustee kicking us out, I'm talking about the landlord catching wind of the situation and kicking us out.

ssmdem, that is a very noble thing of you to do. I commend you for what you are doing.

I really appreciate all of your responses as this is a very trying point in my life, as other things not related to this are going on. When it rains, it definitely pours.. now I'm just trying to find that silver lining...

Check your lease carefully. I really don't think they can just automatically kick you out just because they're mad at you -- which is essentially what they would be doing. If you're paying your rent as agreed, you could fight it if they did. Now whether you'd want to go to the effort would be up to you. It's probably time to start looking anyway since you know it's just a matter of time. I wish you the best! I'm having to look real hard lately at our situation to find our silver lining as well - but it's there. What doesn't kill you makes you stronger.

[frogger]

There's never a "silver lining" in this for anyone. As to you being a tenant, I don't think that anyone here is going to flame you for asking questions. I for one, will not.

I was a landlord in my previous life. (And I will state that I am very, very happy to no longer be a landlord!!!!!)

Here's my opinion, and it's certainly worth as much as you're paying for it.

You signed a lease. You are obligated to uphold your part of the lease, which includes paying for that lease.

The landlord signed a lease. They are obligated to uphold their part of the lease, which includes any maintenance issues and repairs. The lease did not require for them to be current on any payments or taxes that are due.

More than likely, the landlord had signed an "assignment of rents" clause with the lender, which gives the lender the right to collect the rent in case of default by the landlord. So.... if the lender has declared the landlord in default, then the payments would be due the lender. If the lender declared the landlord to be in default, you would have notified by certified mail.

From the time the landlord filed bk, the rental payments will belong to the bk estate and will be distributed by the trustee to the appropriate lender.

After I filed, I did continue to accept payments during that month from the tenants. All of those payments were deposited into the bank accounts at the appropriate lenders bank. At our 341 meeting, the trustee asked about any rental payments that were received after filing bk, and I told the trustee that they were in the correct bank, however they were in my checking account in order that I could write the bank a check for them.

No problems. Trustee happy, lender happy.

If you landlord continues to collect rent, it's no skin off your back. Just make sure that you get receipts.

As to your lease, your lease is valid until it expires. The lender will continue to uphold it, and if it is sold, the lease normally will transfer to the new buyer.

[ssmdem]

There's never a "silver lining" in this for anyone.

Oh c'mon - sure there is. When we had our first sign of impending financial trouble a couple of years ago, I very plainly remember saying that I would do WHATEVER it took to not lose my house. I designed it, we built it from the ground up - there was no way in heck anyone else was living in MY house!!! Fast forward two years, my husband and I have been working 16+ hour days, seven days a week. Our kids are quickly growing up before our eyes, and we're missing it. I've realized (and this is MY silver lining) that THINGS just aren't important, my family is. Our peace and happiness is far more important than any set of walls, no matter how much time I had invested in putting them up. When we're discharged, it will be the FIRST time in over 23 years that I have actually been DEBT FREE!! I can't imagine the relief I'm going to feel. Yeh, it's tough right now, it's awful, I still cry myself to sleep some nights, but I'm at a point that it doesn't matter anymore to me if I live in a certain neighborhood or in a certain quality of house -- I just want to be happy and able to be a good mom again. My silver lining is that I'm actually going to get my family back and be able to spend time with them.

[matababe]

...

The landlord signed a lease. They are obligated to uphold their part of the lease, which includes any maintenance issues and repairs. The lease did not require for them to be current on any payments or taxes that are due.
...

Ok, I understand that I signed a lease, and I also understand that the lease offers a place to live in exchange for monies. But what I want to know is how in the world can you promise someone a place to stay if you entered into the agreement already almost 4 months behind on your payments and knowing that the bank can foreclose on the property at any time?

And as far as this renter clause or whatever, why would she need that if she is claiming to live in the home, and claiming homestead? As far as I'm concerned, no one knows we are here except her.

My point of this whole thing is, it seems a bit shady to me. I'm not looking for revenge, I understand she needs to get on with her life. I have tried contacting her to no avail. At this point, my interest is to protect myself and my family, and that's what I intend to do.

[HOMEBODY]

I feel terrible after reading this. I am filing BK and I've just rented to some very nice tenants. I do intent to keep my property and should I be forced to give up this property, I will dismiss my BK.

I am only filing BK to get rid of my 2nd equity lines of credit and credit cards, not my properties. Once I get rid of these bills, I will finally have some positive cash flow on my rentals.

I am also trying to modify my loans so I'll be good and will have a fresh new start after the BK. I hope my tenant never finds out. That would be terrible.

[matababe]

Something else that comes to mind.. and it all makes sense now why the account was not reported in the bankruptcy is the 2005 Bankruptcy Reform Act, specifically dealing with the rental property.

Before this, landlords could pocket the money they charged tenants for rentals, and get away with not making their mortgage payments. From what I understand, this is not so with the change.

Any thoughts?

[frogger]

Ok, I understand that I signed a lease, and I also understand that the lease offers a place to live in exchange for monies. But what I want to know is how in the world can you promise someone a place to stay if you entered into the agreement already almost 4 months behind on your payments and knowing that the bank can foreclose on the property at any time?

And the question is????

You still have a place to live!

Just because the landlord gets foreclosed on does not mean that you do not have a place to live! Go back and read what I advised you in the earlier post.

[ForumReader]

This is an interesting thread. I am a renter and has notified my landlords of my bk at the time I filed. My landlords were fine with it as long as I have made rental payments on time. However, I would have a problem if my landlords filed for bk and stopped making mortgage payments but continued to collect full rent from me without informing me circumstances may be changed with the rental property. I simply think it is wrong for a landlord to collect full rent while making no mortgage payments and the property heading to foreclosure (no transfer to the lender yet during the period). In this case, rental payments should be discussed to keep up with house maintenance and repairs, not at the FULL desired rent amount causing any profits or such to the landlord. Until the property has been transferred to the lender, then rental payments can be resumed by the original tenants if they are allowed to live there as long as their lease term says so. That is just MPO (my personal opinion).

[frogger]

This is an interesting thread. I am a renter and has notified my landlords of my bk at the time I filed. My landlords were fine with it as long as I have made rental payments on time. However, I would have a problem if my landlords filed for bk and stopped making mortgage payments but continued to collect full rent from me without informing me circumstances may be changed with the rental property. I simply think it is wrong for a landlord to collect full rent while making no mortgage payments and the property heading to foreclosure (no transfer to the lender yet during the period). In this case, rental payments should be discussed to keep up with house maintenance and repairs, not at the FULL desired rent amount causing any profits or such to the landlord. Until the property has been transferred to the lender, then rental payments can be resumed by the original tenants if they are allowed to live there as long as their lease term says so. That is just MPO (my personal opinion).

MPO disagrees with YPO. Two wrongs do not make anything right. Your rental contract is between you and the landlord. Their contract with the lender is not of the tenants concern.

Provided that the landlord upholds his end of the rental agreement, then you have no legal or moral reason not to pay rent to your landlord.