At a time when RealtyTrac announced that there are approximately 181,000 new foreclosed properties, you as a prospective renter must be very proactive in choosing the right landlord and property for you and your family. Although foreclosures are all throughout the country, the largest concentration is in Miami, FL; Chicago, IL; Las Vegas, NV; Los Angeles, CA; and Jacksonville, FL.
So, choosing the right landlord is paramount. Caveat: Don’t let the landlord pick you!
First: Ask questions of the homeowner and/or the Realtor when previewing the property.
- Is/was this home owner-occupied?
- Is this property an investment rental property?
- Are the mortgage payment, homeowner’s insurance, real estate taxes, and HOA/Condo fees up-to-date? Confirm before signing a lease.
- When was the last time the HVAC system been checked?
- How old is the roof?
- Is the home in a pre-foreclosure or foreclosure status?
- Has there been any water, mold/mildew, or pest/rodent damage?
Second: My personal preference — before providing any confidential information to the prospective homeowner, ask them for the same credentials: a credit report, a criminal background check, and a copy of their driver’s license or state identification. Why not screen your landlord too? After all, do you want to rent from someone who has a criminal background or financial problems and on the verge of losing their home to foreclosure?
Third: Request that your security deposit, if one is required, be put into an interest-bearing escrow account.
Fourth: Know your rights as a tenant. You have many.
Fifth: Remember, everything is negotiable from the rental amount, the security deposit, length of the lease, and terms of the lease. Make sure, however, that the rent requested reflects the prevailing rates.
Sixth: Request to see the preceding six months of the homeowner’s utility bills (water, electric, gas) to get a sense of the total cost of the monthly rental. Don’t take their word for it.
Seventh: Visit the property different times during the day and at night to get a feel for the neighborhood and neighbors. Be cognizant of cars with flat tires or missing license plates, un-manicured lawns, dangerous dogs, loitering, vehicle or foot traffic in and out, etc.
Ninth: Once you do all your due diligence and are handed the keys, take pictures of both the outside and inside of the property on the day you move in, and note in writing any damages (no matter how minor). Both the landlord and tenant must sign this addendum.
Tenth: Make sure that all and any statements pertaining to the landlord-tenant relationship and property are in writing. Oral agreements do not hold up in court if the landlord-tenant relationship becomes acrimonious.
Performing due diligence should minimize any foreseeable problems or surprises. However, sometimes bad things still happen even when you have done everything right to prevent them. So, if you find yourself in a situation in which your landlord is in the process of foreclosure, you are protected by the “Protecting Tenants at Foreclosure Act of 2009.” So, just STAY PUT! You “now” have rights regarding an eviction from a foreclosed property.
- The lease and tenancy take precedence. Your lease survives a foreclosure; this is why it is extremely important to have one. Note: If you are a month-to-month tenant or in a property where a new owner will occupy the premises, you are still entitled to 90 days notice to vacate without penalty.
- If someone official tells you something that doesn’t make sense, get his/her full name and affiliation.
- Get everything in writing. Read everything and don’t sign anything until a lawyer or third-party reviews it.
- Know that “cash for keys” is only a request from the bank or mortgage company, which may not be in the tenant’s best interest.
- Check your state and local laws because there may be additional protection offered to the tenant.
So the bottom line is: do due diligence and be informed, choose the right landlord, and know your rights as a tenant in a foreclosed property.