It must be Murphy’s Law. You’ve finally made it to the place in life where you’re not struggling to pull together the rent money. Heck, you even pay your rent up to a week or more before it’s due. You finally feel like you’ve got some security when it comes to your residence. You’ve got renters insurance to cover all of your stuff in the event that something horrible happens, and you’re not tied down to a mortgage (even though you could have one if you wanted to). So what if the housing market bottoms out and people are defaulting? You don’t have to worry about that.
Unless, of course, you rent from a deadbeat.
Now, in theory, the money you pay your landlord in rent should be enough to cover his mortgage. Really, it should. This is especially true if you’re living in a single-family dwelling. It’s not like there are three other apartments in the building he needs to rent out to make enough to pay the mortgage.
So, you keep writing rent checks, assuming he’ll pay his mortgage. But, he doesn’t. He used the money for more nefarious purposes, like drugs, booze or Webkinz for his children.
There is no law that says he has to pay his mortgage just because he’s getting rent money from you, either. No, it’s not especially ethical or responsible, but it’s also not illegal.
So, the dirtbag doesn’t pay his mortgage, and he defaults. The bank decides to threaten to foreclose. Unfortunately, you’re the one living in the rental property, and you start getting 90-day notices about how the house you’re living in is going up for sale.
Now, the temptation might be to stop paying rent. That’s a bad move, for several reasons. Mainly, your landlord’s foreclosure doesn’t void your lease. In fact, you’re required to fulfill the terms of your lease right up until the day the bank takes possession.
There are some laws – and these can vary from one state to the next – about your rights as a renter when your landlord is foreclosed. In some states, the bank is required to notify you, as well as the landlord ahead of time. Other states leave that to the landlord. You should check with an attorney if you’re concerned that someone is violating a law, but the bottom line is that you may be forced to move no matter what.
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