Our landlord left us in limbo -- what happens next?
February 10, 2015 4:56 PM Subscribe
The landlord for our Chicago apartment got foreclosed on, and we’ve been left without anyone to pay rent to. What happens next, and how can we make sure we don't get evicted?
A few months ago the bank foreclosed on our landlord and put a local realty company in charge of managing our rented apartment. We’ve been paying rent to them ever since … but this month, two days before our rent was due, we got an abrupt email from the realty company telling us that the property had been sold and they were no longer managing it.
I called and asked to whom we should pay rent, and the realty company told us not to make any payment, and to wait until our new landlord got in touch. That was two weeks ago, and we haven’t heard anything. We have no idea who now owns the property, who is managing it, or to whom we should be paying rent. The realty company has now stopped returning our calls and emails. (We also have a toilet leaking sewage onto the bathroom floor, and nobody to call for maintenance assistance, but that’s a whole other issue.)
Adding to all this, today I got an email from the realty company saying they wanted to return our security deposit. They emailed us an acknowledgement of receipt to send back to them and also a hold-harmless clause basically saying we can never hold them liable for any damages we incur through their handling of the deposit. They say once they’ve received the acknowledgment of receipt and the hold-harmless paperwork, they’ll mail us back our original security deposit.
Our main concern in all this is to ensure we don’t do anything that could vacate our existing lease. We’ve got 18 months left on the contract, and our understanding is that the lease transfers to the new owner of the building, so we want to make sure we don’t do anything to jeopardize that.
My questions:
— Would accepting the deposit back do anything to mess up our existing lease? My sense is that the realty company should be transferring the deposit directly to our mysterious new landlord, not to us, and I don’t want to inadvertently cancel our lease by accepting back the deposit. On the other hand, we also can’t afford to somehow lose the security deposit, so grabbing it back for safekeeping is very tempting.
— I’m disinclined to sign a receipt for the returned deposit before I actually have the check in hand, but am I right to also feel queasy about the hold-harmless paperwork? If the realty company is simply holding onto my money, do I really have to sign away rights in order to have them release it?
— Is there anything else that I can or should be doing to ensure my lease continues? I’m trawling through Chicago property-sale records to try to figure out who now owns the building, and we’ll pay back-rent as soon as our landlord surfaces, but we want to make sure we don’t somehow get evicted for failure to pay rent in the meantime.
— Can we legally get repair work done (that toilet!) and deduct it from our future rent payments? Our contract says we can deduct repair costs if we’ve previously given written notice to our landlord, but obviously that isn’t possible right now.
Thanks!
A few months ago the bank foreclosed on our landlord and put a local realty company in charge of managing our rented apartment. We’ve been paying rent to them ever since … but this month, two days before our rent was due, we got an abrupt email from the realty company telling us that the property had been sold and they were no longer managing it.
I called and asked to whom we should pay rent, and the realty company told us not to make any payment, and to wait until our new landlord got in touch. That was two weeks ago, and we haven’t heard anything. We have no idea who now owns the property, who is managing it, or to whom we should be paying rent. The realty company has now stopped returning our calls and emails. (We also have a toilet leaking sewage onto the bathroom floor, and nobody to call for maintenance assistance, but that’s a whole other issue.)
Adding to all this, today I got an email from the realty company saying they wanted to return our security deposit. They emailed us an acknowledgement of receipt to send back to them and also a hold-harmless clause basically saying we can never hold them liable for any damages we incur through their handling of the deposit. They say once they’ve received the acknowledgment of receipt and the hold-harmless paperwork, they’ll mail us back our original security deposit.
Our main concern in all this is to ensure we don’t do anything that could vacate our existing lease. We’ve got 18 months left on the contract, and our understanding is that the lease transfers to the new owner of the building, so we want to make sure we don’t do anything to jeopardize that.
My questions:
— Would accepting the deposit back do anything to mess up our existing lease? My sense is that the realty company should be transferring the deposit directly to our mysterious new landlord, not to us, and I don’t want to inadvertently cancel our lease by accepting back the deposit. On the other hand, we also can’t afford to somehow lose the security deposit, so grabbing it back for safekeeping is very tempting.
— I’m disinclined to sign a receipt for the returned deposit before I actually have the check in hand, but am I right to also feel queasy about the hold-harmless paperwork? If the realty company is simply holding onto my money, do I really have to sign away rights in order to have them release it?
— Is there anything else that I can or should be doing to ensure my lease continues? I’m trawling through Chicago property-sale records to try to figure out who now owns the building, and we’ll pay back-rent as soon as our landlord surfaces, but we want to make sure we don’t somehow get evicted for failure to pay rent in the meantime.
— Can we legally get repair work done (that toilet!) and deduct it from our future rent payments? Our contract says we can deduct repair costs if we’ve previously given written notice to our landlord, but obviously that isn’t possible right now.
Thanks!
Call Chicago's Rents Right line and explain the situation and see what they can suggest.
Keep in mind the very real possibility that you're going to have to move soon. Might want to start reviewing your options.
posted by erst at 5:04 PM on February 10, 2015 [5 favorites]
Keep in mind the very real possibility that you're going to have to move soon. Might want to start reviewing your options.
posted by erst at 5:04 PM on February 10, 2015 [5 favorites]
(P.S. a friend in California dealt with something like this, and had the right to stay in the home through the end of a long-term lease, but your laws might be different. The laws here also provide for continued maintenance while you're in the home, which I'd assume might be the same...)
posted by three_red_balloons at 5:06 PM on February 10, 2015
posted by three_red_balloons at 5:06 PM on February 10, 2015
Legal questions, with specific legal answers. You need a lawyer, not mefi.
Look up lawyers and any tenants unions/groups in your area.
Nominally leases should transfer to the new owner, but there's all sorts of local legal specific gotchas that you need a lawyer to sort out before you get screwed over. Yes it will cost some money.
My pessimistic prepared mind says to plan for the contingency of an asap emergency move, and hope the lawyer will help you keep the lease.
posted by TheAdamist at 5:08 PM on February 10, 2015 [3 favorites]
Look up lawyers and any tenants unions/groups in your area.
Nominally leases should transfer to the new owner, but there's all sorts of local legal specific gotchas that you need a lawyer to sort out before you get screwed over. Yes it will cost some money.
My pessimistic prepared mind says to plan for the contingency of an asap emergency move, and hope the lawyer will help you keep the lease.
posted by TheAdamist at 5:08 PM on February 10, 2015 [3 favorites]
We had a landlord foreclosed upon a few years ago in upstate NY. We received notice to vacate the premises as of a few weeks later; we'd been planning to move two months later anyways, so we gambled (correctly, as it turns out) that nobody would bother us if we weren't out as of their arbitrary date.
I imagine it varies by locale, but my understanding is that tenancy laws tend to strongly favor the tenants; it's very hard to turn someone forcibly out onto the street. So yes, certainly plan for the possibility of moving, but I wouldn't expect it having to be an "asap emergency" move either.
posted by jeffjon at 5:19 PM on February 10, 2015 [3 favorites]
I imagine it varies by locale, but my understanding is that tenancy laws tend to strongly favor the tenants; it's very hard to turn someone forcibly out onto the street. So yes, certainly plan for the possibility of moving, but I wouldn't expect it having to be an "asap emergency" move either.
posted by jeffjon at 5:19 PM on February 10, 2015 [3 favorites]
Perhaps you can use the website of the Recorder of Deeds to find out who the new landlord is.
posted by sciencegeek at 5:19 PM on February 10, 2015 [2 favorites]
posted by sciencegeek at 5:19 PM on February 10, 2015 [2 favorites]
Sign nothing with the bank until you get the deposit back.
Don't pay rent, put the money in a savings account. Wait. You may get a free month or two out of this.
Get this, my friends lived in their house in Florida rent free for 18 months when their owner was foreclosed on. He called them and said, "the bank is taking back the house, don't send me any more money."
They were on their own when the water heater went on the fritz, but it was peanuts compared to free rent.
Hang onto that letter from the bank, it proves that they have your deposit.
If the owners want to take possession, they may pay you out of your lease.
Don't freak out just yet.
posted by Ruthless Bunny at 5:23 PM on February 10, 2015 [18 favorites]
Don't pay rent, put the money in a savings account. Wait. You may get a free month or two out of this.
Get this, my friends lived in their house in Florida rent free for 18 months when their owner was foreclosed on. He called them and said, "the bank is taking back the house, don't send me any more money."
They were on their own when the water heater went on the fritz, but it was peanuts compared to free rent.
Hang onto that letter from the bank, it proves that they have your deposit.
If the owners want to take possession, they may pay you out of your lease.
Don't freak out just yet.
posted by Ruthless Bunny at 5:23 PM on February 10, 2015 [18 favorites]
Illinois Legal Aid Online has a self help guide for this situation and is HIGHLY reputable. You can browse through their guides or find direct services to help you: Go to http://www.illinoislegalaid.org. Type "My Landlord Was Sued for Mortgage Foreclosure" and your zip code into the search box. Then go through the guide for finding services.
Until you get a definitive answer, bank your rent payment. Don't give it to someone without proof in the form of a court order or judgment that it is supposed to go to them (even the landlord listed on your lease) and don't spend it (you sill owe it to someone)
posted by crush-onastick at 5:29 PM on February 10, 2015 [7 favorites]
Until you get a definitive answer, bank your rent payment. Don't give it to someone without proof in the form of a court order or judgment that it is supposed to go to them (even the landlord listed on your lease) and don't spend it (you sill owe it to someone)
posted by crush-onastick at 5:29 PM on February 10, 2015 [7 favorites]
You do have rights in the situation, but you might want to start looking for a new place, by the way. Evictions take time, but the foreclosure may be sufficient cause to evict all tenants.
The refund of your deposit is unlikely to have any impact on your ability to continue your lease, by the way. And you should not sign a receipt for it until you receive the funds.
posted by crush-onastick at 5:32 PM on February 10, 2015
The refund of your deposit is unlikely to have any impact on your ability to continue your lease, by the way. And you should not sign a receipt for it until you receive the funds.
posted by crush-onastick at 5:32 PM on February 10, 2015
My sense is that the realty company should be transferring the deposit directly to our mysterious new landlord, not to us
While I definitely would not sign a receipt until you have the deposit already in hand, I don't think there is necessarily anything shady going on just because they want to return the deposit. I also rent in Chicago, and twice in the past several years (at different apartments) I've had deposits returned early and unexpectedly.
The first time was when the landlord changed management companies, and the second time was when the building was sold to a new owner (albeit not through foreclosure). I believe that landlords and/or management companies do this because they've decided that the hassle of correctly handling the security deposit (they are supposed to keep it in a separate account by itself, and to tell you where that account is, and to send you statements showing the interest you're earning, etc.) is not worth the trouble.
(I believe this is the same reason that so many Chicago apartment listings now say they don't want a security deposit but instead want a scammy non-refundable move-in fee).
posted by enn at 6:06 PM on February 10, 2015
While I definitely would not sign a receipt until you have the deposit already in hand, I don't think there is necessarily anything shady going on just because they want to return the deposit. I also rent in Chicago, and twice in the past several years (at different apartments) I've had deposits returned early and unexpectedly.
The first time was when the landlord changed management companies, and the second time was when the building was sold to a new owner (albeit not through foreclosure). I believe that landlords and/or management companies do this because they've decided that the hassle of correctly handling the security deposit (they are supposed to keep it in a separate account by itself, and to tell you where that account is, and to send you statements showing the interest you're earning, etc.) is not worth the trouble.
(I believe this is the same reason that so many Chicago apartment listings now say they don't want a security deposit but instead want a scammy non-refundable move-in fee).
posted by enn at 6:06 PM on February 10, 2015
This link talks about the security deposit.
Also transfer of ownership doesn't void or change the lease (unless you agreed to that when you signed the lease). So the current lease survives unchanged and your lease is a legal Encumbrance on the title. All the conditions of the original lease still survive and are passed on to the new owners.
posted by Zedcaster at 6:21 PM on February 10, 2015
Also transfer of ownership doesn't void or change the lease (unless you agreed to that when you signed the lease). So the current lease survives unchanged and your lease is a legal Encumbrance on the title. All the conditions of the original lease still survive and are passed on to the new owners.
posted by Zedcaster at 6:21 PM on February 10, 2015
If you are one of 5, or 50, tenants, you have the power to do what many tenants cannot - pool your resources, find and pay for genuine legal advice and even representation. If it costs $2,000 to get a good sense of what your rights are - and it probably should not - that money divided among several tenants can be manageable.
posted by yclipse at 7:42 PM on February 10, 2015 [1 favorite]
posted by yclipse at 7:42 PM on February 10, 2015 [1 favorite]
I am a real estate investor and a landlord. I have purchased several foreclosures with tenants. In fact, I just closed on a triplex about 3 weeks ago, and it came with a tenant who has not paid rent in over 6 months.
Don't get a lawyer. That is a waste of your money. What do you think the lawyer will do for you?
You live in Illinois. That is a tenant friendly state. I live in Florida, a landlord friendly state, and it takes me 30 days to complete an eviction. No one is going to kick you out in the middle of the night. You will be served legal notice when the eviction process starts, and it will take at least 30 days.
But there is a super simple way to stop the eviction process, pay all back rent. But, maybe you can get away with not paying back rent. Maybe you can get a few months of rent free living out of this. If the multi-national bank that irresponsible loan to finance the building is also too irresponsible to collect rent, don't feel bad benefitting from this.
What you should do is set up a separate savings account in your bank. Pay rent every month into that account. If someone comes looking for rent, tell them you will pay the current month, and start paying rent again each month like normal. Tell them that you do not have the money for back rent, and you did not know who to pay. Sorry.
They might accept this. They may very well view back rent as part of their overall loss, they might not want to evict you. But, if they do come at you hard, and demand back rent, then you have it in your savings account. Then you pay.
Keep in mind also, unless you have a lease, a new buyer can force you out anyway (at least in Florida they can) - so, only pay back rent if they agree to give you a new lease. I mean, do not pay back rent, then a week later, find out you are getting evicted anyway.
posted by Flood at 4:04 AM on February 11, 2015 [8 favorites]
Don't get a lawyer. That is a waste of your money. What do you think the lawyer will do for you?
You live in Illinois. That is a tenant friendly state. I live in Florida, a landlord friendly state, and it takes me 30 days to complete an eviction. No one is going to kick you out in the middle of the night. You will be served legal notice when the eviction process starts, and it will take at least 30 days.
But there is a super simple way to stop the eviction process, pay all back rent. But, maybe you can get away with not paying back rent. Maybe you can get a few months of rent free living out of this. If the multi-national bank that irresponsible loan to finance the building is also too irresponsible to collect rent, don't feel bad benefitting from this.
What you should do is set up a separate savings account in your bank. Pay rent every month into that account. If someone comes looking for rent, tell them you will pay the current month, and start paying rent again each month like normal. Tell them that you do not have the money for back rent, and you did not know who to pay. Sorry.
They might accept this. They may very well view back rent as part of their overall loss, they might not want to evict you. But, if they do come at you hard, and demand back rent, then you have it in your savings account. Then you pay.
Keep in mind also, unless you have a lease, a new buyer can force you out anyway (at least in Florida they can) - so, only pay back rent if they agree to give you a new lease. I mean, do not pay back rent, then a week later, find out you are getting evicted anyway.
posted by Flood at 4:04 AM on February 11, 2015 [8 favorites]
You should seek legal advice because laws very by jurisdiction and knowing your tights and the local process will help you enforce them. But in any case putting the back rent in a separate account is probably a safe bet.
posted by SpaceWarp13 at 5:48 AM on February 11, 2015 [1 favorite]
posted by SpaceWarp13 at 5:48 AM on February 11, 2015 [1 favorite]
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posted by three_red_balloons at 5:03 PM on February 10, 2015