Foreclosure (but not on us personally) How long til the bank bounces us out and we dont get to live rent-free? Because this is pretty awesome right here.

April 22, 2011 11:58 AM

Foreclosure!!!(but not on us personally) How long til the bank bounces us out and we dont get to live rent-free? Because this is pretty awesome right here.

We live in a part of California rife with foreclosures. The awesome duplex we are renting is getting foreclosed upon at some point because our flipper landlord hasnt been paying the mortgage even tho we have been paying rent. He says we dont have to pay rent now and he will continue to pay sewer and garbage until we find a new place. How long til the bank bounces us out and we dont get to live rent-free? My understanding is that its a very long process.
Is it possible the bank will maybe set up a new landlord and we can just keep on with the place? We really like it.

posted by Senor Cardgage to home & garden (18 answers total)

The one statistic I've heard is it can take up to nine months, but that was like seven years ago, and it varies by state, anyway.
posted by Mister Moofoo at 12:09 PM on April 22, 2011

It depends on the bank.

The process can take a long time. And if the bank has too many foreclosures in that area, they might let it sit for a while.

However, I would caution against the feeling that you just won the lottery. Foreclosure is not a pretty process, you are in the middle of a shit storm - it might be wise to not dance and cheer over that fact.

Do you have it in writing from the landlord that you do not have to pay rent?

Your land lord may bring an action against for non-payment of rent. Either to evict you, or to get the money at some later point.

If you were smart, set up a small secondary bank account - and pay your rent into that account every month. If the shit storm lands at your door step, you are OK, because you have the back rent. If you manage to glide through the storm free and clear, than you have a nice little savings set a side.
posted by Flood at 12:10 PM on April 22, 2011 [4 favorites]

and he won't pay the bank but will pay sewer/water/garbage ? Might want to start keeping bottled water around in addition to that second account .. (And find where the open dumpsters are on your commute to work..)
posted by k5.user at 12:12 PM on April 22, 2011

I may also be wrong, but isn't the final stage of foreclosure also a sheriff's deputy nailing a note to your door that tells you you have a few hours to get your stuff out, at which point the bank's wrecking crew shows up?

If you want to play this game, have a bomb-proof paper trail.
posted by straw at 12:14 PM on April 22, 2011

"Is it possible the bank will maybe set up a new landlord and we can just keep on with the place? We really like it."

That's highly unlikely, unless you set it up in advance with the bank and buyer. It might be worth a try.

The amount of time you have can vary. It's probable that the owner has been skipping the mortgage for a long time already. This can go on six months to a year (or even longer) before the bank actually forecloses, or starts the foreclosure process.

The foreclosure time can vary as well - there are legally established amounts of time for various processes to occur. Whether these actually occur properly and timely is a function of how badly the bank wants to foreclose, and if anyone tries to stymie the process using legal counter-processes.

The person to ask is the landlord. After that, ask to talk to the bank.

You should have at least thirty days advance notice to move out - I am not certain of the legal nature of that. You may get sixty to ninety days notice.

The bank will often have a representative come to the owner or tenant and offer a cash incentive to move out in a timely manner, two weeks or thirty days. This might be from $1,000 to $3,000. I don't know if they would offer this to the landlord and not the tenant - it makes sense that they'd want the tenant out, that's the reason for the move-out incentive.
posted by Xoebe at 12:17 PM on April 22, 2011

You want to talk to a lawyer in CA.

Or, check out these links.
posted by Aizkolari at 12:19 PM on April 22, 2011

Oh, and the landlord's offer to pay the sewer and water smells like complete horseshit to me. He won't pay the mortgage, but will let money out of his pocket to pay utilities? No way.

I wouldn't set up an account and set aside the rent, either. Pay the rent, even if you have the chase the guy down and shove it down his throat. I have heard of unscrupulous note holders and landlords who have avoided receiving payments just so they could take legal action against the tenants. Having the rent set aside to pay after the fact won't protect you if he can prove you didn't pay on time. Hell, he might just accept the full back rent and come after you anyway for non payment.

That being said, ask the landlord for a written letter offering the waiver of rent and stating he'll pay the utilities. I'll eat my hat if he agrees.
posted by Xoebe at 12:22 PM on April 22, 2011

I'd put that rent into a saving account and prepare to move.

Technically, you have a lease with the landlord. Stop paying = breaking that lease; which, entitle him to throw you out within 30 days. He is still the owner of that place until the trustee sale complete. He is supposed to forward the rent to the bank as soon as he is in default (i.e. when he miss his first mortgage bill). He didn't, and the bank can still go after him for that money (among many other things), just like he can go after you for missing rents. Of course, neither may do that.

The bank will unlikely to sign a new lease with you, they usually don't like to be landlord. Most likely, they will ask you to move so they can prepare the place for sale.

Foreclosure takes at least 3 months to complete, sometime longer, depends on many factors.
posted by curiousZ at 12:25 PM on April 22, 2011

Pay the rent to whom? Landlord isn't going to pay the mortgage with it. Bank wouldn't have a process for accepting. Me, I'd put it in an account, and be prepared to pay water, sewer, etc., on my own. Your local Legal Aid group (find them in the deadtree phone book which usually has a section on community resources) can tell you the rules regarding eviction. Lots of people made gobs of cash in real estate growth, and again in its failure, so it's hard to get worked up about you getting some free rent.
posted by theora55 at 12:59 PM on April 22, 2011 [1 favorite]

All depends. We have some friends who have been living Mortgage free for about 16 months now and still nothing from the bank. Pretty crazy..
posted by NotSoSimple at 1:12 PM on April 22, 2011

He won't pay the mortgage, but will let money out of his pocket to pay utilities? No way.

Give me a break. Unless your sewer and garbage bill is as expensive as your mortgage, this is a silly assumption to make.

Just because I can't afford a mansion doesn't mean I won't eat lunch today.

Still: get it (all of it) in writing.
posted by toomuchpete at 1:20 PM on April 22, 2011 [1 favorite]

the landlord's offer to pay the sewer and water smells like complete horseshit

Yes; be prepared to live without electricity or water if you stay. And since you are not on the deed the city will not turn it back on for you, only the owner can do that.
posted by banshee at 1:34 PM on April 22, 2011

Just move.
posted by tomswift at 2:32 PM on April 22, 2011

Geeze, I wish this would happen to me. I would put the rent in a savings account. And make sure you check that sewage and garbage are actually being paid. I personally would stay and be ready to move very quickly. If you have to move, you will be able to use the money from the account; if you get to stay and they want back rent, you will have it.
posted by fifilaru at 3:14 PM on April 22, 2011

I would not miss a single rent payment without a statement in writing. Otherwise, I don't see any way to distinguish between a friendly say-so and a honey trap to lure you into breaking the lease so that the house doesn't have tenants attached.

If you mail the checks, mail them certified. Do everything you can do to document that your landlord received those checks. Otherwise you could find yourself literally out in the cold.
posted by KathrynT at 3:25 PM on April 22, 2011

I would:
a) save the rent money in an account, as a bug-out fund;
b) stay until you are certain you need to move (this will not be extremely sudden, there are notice requirements);
c) monitor the court case closely, understand the timeline, studying the documents that the bank sends you (typically now tenants are included, although this varies somewhat, and there is a federal law);
d) decide if you want to try to stay in the house even if sold, and if so, contact the lender directly. They may not want to deal with you, or they may only want to deal with an attorney. But ultimately you may be able to strike a deal with the bank to stay, or at least agree to an end date.

In some states the bank can demand the rent directly from the tenant, effectively garnishing the landlord's rental income, but this usually requires a court order.

so that the house doesn't have tenants attached

This is not as important in foreclosure. In fact, the bank may prefer to have tenants -- the insurance for vacant property is many times higher than occupied, and especially in foreclosure-heavy areas, house-stripping and other depredations are depressingly common.

You can avoid a lot of hassle if you do move now, but it really depends on how settled you are and what else is going on for you. I would much prefer an orderly exit involving the pre-move rummage sale, storage unit stashing of low-latency household items, and the time to select a new place without the pressure of an eviction notice.

But if you do really like the place, there are plenty of reasons that the bank and/or any subsequent owners would prefer to have you there as well, so play that angle.

Ultimately, the bank cannot evict you unless they take full possession of the property, and they have notice requirements under the law. They probably can't do this until the hearing that follows the public auction, unless they come to an agreement earlier with your landlord. But of course the landlord could evict you capriciously, so try to keep on good terms with him one way or another.
posted by dhartung at 3:36 PM on April 22, 2011

My friends got hired by a Fannie Mae last year to take care of this type of situation. They have SO MANY houses in foreclosure that they have no idea the condition of the homes, who is living in them, etc. So they got paid to drive around, take pictures and knock on doors. If people were living there then there next task was to get them to sign a NEW lease, this time with Fannie Mae. Often people were not thrilled with this, as they had been living for free for months, but it was often a much cheaper rent than previously, they were not asked for back rent, and they were also given a stipend to spend if the home needed repairs (since the previous home owner would have neglected the place). If they were not willing to sign a new lease this is when the process of having them removed would begin, and they were not given a ton of time.

So, it is possible this will happen to you. I would save up some money, but it is possible that one day the bank will knock on your door and negotiate to keep you in there.
posted by boulder20something at 1:49 PM on April 23, 2011

Wow - your 'friend' needs to realize this isn't a free ride. Money may not be coming out of your pocket right now, but watch out for when (not IF) it happens.

You can assume your landlord is gone, but why not mail those checks certified? If he says he's not asking for rent, he may not even cash them - and you have a paper trail to prove you paid.

Re: water and sewer - call them up and ask about the account. You may run into a roadblock because you're not the owner, but you might get by by explaining your situation.
posted by chrisinseoul at 6:17 AM on April 24, 2011