It’s quite the hot topic in certain circles. Homeowners in the foreclosure process, choosing to rent out their home. Are they allowed to? What about the renters? Were they aware of the pending foreclosure action on the house they live in? Did they move in knowing the owner was in trouble, and for whatever reason, didn’t care?
All good questions, and things to think about, when discussing the sensitive subject. In Santa Clarita, and elsewhere across the country, homeowners in foreclosure frequently rent out their home prior to foreclosure action, or in the middle of it. They tend to be in financial turmoil. They are, or will be soon, behind on their mortgage payments. They need income. Perhaps they can save money by vacating, and going to live with family. Meanwhile, collect rental income! Sounds like a good plan, for some.
Too Late!
Unfortunately, all to often, renters aren’t aware of the financial state of affairs the homeowner is in. And they only find out once a Notice of Default is posted, or they get a knock on the door from either the banks representative, or the new owner who purchased the home at a foreclosure trustee sale. Any of those scenarios, is really late in the game from the perspective of most, especially the renters involved.
Contrast the unsuspecting renter, with the increasingly more common situation, where there are actually renters who are seeking out such residences. People with semi-temporary needs, that feel they can get a break on rent on a home that’s in foreclosure. Perhaps they only need a rental home for 3 or 6 months? Maybe once time runs out on the home, they’ll go find another home, in the same exact situation. Homeowners that are in foreclosure, will sometimes discount what the home could actually rent for, and lease it out for hundreds of dollars less per month, with the renter knowing full well, that the honeymoon could end at a time uncertain.
Disclosure
It all comes down to disclosure. Homeowners that know they are in financial trouble and may be missing payments soon, or are already. Should disclose this to prospective renters. Likewise, it should go without saying, that if a homeowner has already missed payments, and received a Notice of Default on the home, or even a Notice of Sale, they should disclose this fact to prospective renters. Failure to do so, could put the renter in a position to sue the homeowner for moving expenses, and even increased rent at their future home they are forced to move to. If you’re a renter, speak with a lawyer in your state to find out the remedies available to you, as they may vary. If you’re a seller, do the right thing and disclose any information that the renter should know in order to make a well informed decision as to whether or not to rent from you.
Know Your Federal Rights
Are you a tenant? Read up on your rights, provided to you by the Protecting Tenants at Foreclosure Act.
Tools & Resources
Are you renting a home in Santa Clarita, and or are setting out to? We can tell you if any home in the Santa Clarita Valley is in the actual foreclosure process. It’s public record. We can’t tell you, of course, if someone is about to. They must have received a Notice of Default, or Notice of Sale, for us to know. You can search for foreclosure listings at our Santa Clarita Real Estate website using Foreclosure Radar. Or, just call us and give us an address! You can reach us anytime here at The Robert and Brian Team @ 661-964-1760.
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