Upcoming Foreclosures

Real Estate law regarding foreclosure and tenants rights?

First off sorry for the long post but I feel like more details are better than not enough. So I have been living in an apt for 2 years now, rent is around $900 a month. My roommate and I did not have good credit at the time of the signing so they required a double security deposit ($1800) Our lease is expiring and the owner is planning on selling the house (at least that is what we were told). The owner (through a property manager) offered us a reduced rent for signing a month to month lease ($500). I received this "lease" and realized all it is, is an addendum to the original lease. The first page it titled...."Property foreclosure disclosure agreement" Now the property manager did mention that the house may be going into foreclosure that I am fine with. Most of this paper that they want us to sign is informing us that it may be termed early and we have to pay for any costs associated with moving, however, the last paragraph "security deposit and/or advance rent" scares me. It starts as follows: Tenant agrees that the security deposit and/or advanced rent, if any, shall be processed by property manager or owner as per terms of the lease, and tenant agrees that such security deposit and/or last month's rent, if any, may be transferred to the current or the new property owner or property manager at the sold discretion of the property manager, and the tenant holds property manager harmless for any loss of the security deposit, if any. Tenant understands that the security deposit may be at risk in the event of a foreclosure or in the event the monies are transferred to the Owner or new owner. Then at the very bottom in bold: All provisions of the lease shall apply unless in conflict with this addendum in which case this addendum shall apply. I feel like by signing this paper.... which isn't even really a lease... all I am doing is signing away my right to get back my security deposit. Is this a normal legal paragraph? Or should I refuse to sign this? Any help on this matter would be greatly appreciated. My roommate and I have been great tenants always have paid on time maybe a day or 2 late twice in 2 years we have taken great care of the house and literally in 2 years have not needed any work done. My bro-in-law is a mortgage broker and I had him look up the property and we found a couple things odd. First the owner took out a 2nd home mortgage to get this property. I would think it should be an investment property if the owner is renting the property. Also we found out that the condo is not even listed as for sale.... However we have had 2 or 3 people come to look at it with a real estate agent. Please help! Yeah, was asking for answers not a link, and that is the sketchiest website I have ever seen....

Public Comments

1. You can strike out the part you don't agree with. Use bold black ink.
2. That sentence is there strictly to protect the current owner from a lawsuit by you and your roommate. Your security deposit and lease will transfer to the new owner of the house with the transfer of title. Technically speaking, your security deposit is supposed to be kept in a side account somewhere until you move out. There is no such thing as a nonrefundable deposit when it comes to renting. They most likely had you switch to a month-to-month lease to make the property sell faster. Keep in mind that as soon as the property sells, you could immediately end up with a 30 day notice depending on what the new owner wants to do with the condo. Foreclosures don't normally show up on the multiple listings service
3. If your lease contract is expiring you would automatically go into a month to month rental agreement without signing anything at all. This landlord is attempting to place himself in a position to protect himself in not returning the deposit you made when you signed your lease. You may also look at it as the reduced rent would return your deposit in about 4 months, so this might be to your advantage. If the foreclosure procedure take longer than 4 months you would collect more than just your deposit. Even with signing this document an illegal document can not be enforced in a court of law nor supersede any city,county or state law. There are many laws in states that indicate the disposition of rental deposits. He has simply hired a lawyer that crafted this document for all tenants to sign, even though it might be found to be illegal in most courts, it could prolong the court process. Going through foreclosure being a tenant is a unique process in itself. Whatever you do you must continue to pay the normal rent. For tax and legal matters you should always consult your tax consultant and attorney. I hope this has been of some benefit to you, good luck. "FIGHT ON"
4. First off, if you go month-to-month after a lease, the terms of the lease still apply, so that last bit is perfectly normal. As I read the bit about the security deposit, I think that it would legally stand up, and it's not that unusual of a clause. What it says in essence is that, if the place is sold, you will need to get your deposit and advance rent back from the new owner, not the old one. If the new owner says that they never got the deposit from the old owner, that still doesn't release them from the obligation legally, so that is also pretty standard. Now, if the spot forecloses, then you would legally have recourse against the old owner for the security deposit. But, if he is losing the place because he can't pay it, the odds that he can pay your deposit back are slim, so the best you can do in that case is take him to court, get a judgement, and hope at some point in the next ten years you can get the money from him. Is it worth it to you to do that? Only you can decide that. The biggest thing here is that you are going month-to-month in a situation that is very volatile, so you know you may be asked to move in 30 days at any time. Is it worth it to you to live like that, or do you want more security? If you move out now, you get a spot with a lease and you get your security deposit back. If you need flexibility, you may want to stay with the reduced rent and loose term (since you can technically end that rental with a 30 day notice, and he would then have to refund the deposit). If you refuse to sign it, you have no right to stay there. So what you need to decide is whether moving or staying is the best option for you at this time in your life.
5. this should make you feel better; real estate is one of the only areas of law where a tenant may not purposely or accidentally SIGN AWAY his rights. so, you are covered. Luck
6. Wow. I don't blame you for being concerned. The unit is being foreclosed upon. The new owner may or may not want to honor the terms of the lease, so those clauses are there to protect the new owners' status. The paragraph you are questioning means that the new owner will have the right to keep the security deposit if he feels it necessary to cover any losses he may incur. It also protects the current owner from a lawsuit by you in the event you leave and want monetary recourse from him. Even though the condo is not listed for sale, it can be shown to potential purchasers. It's up to you whether to sign the lease. Keep in mind that the new owner may not want to honor your month to month lease agreement and may give you 30 days' notice to quit the premises. It may be a chance you are willing to take, but maybe not. If not, don't sign the agreement and start looking for a new place to live after giving the current owner proper notice. Otherwise, you'll have to sign the agreement and take your chances. But remember, the new agreement will override any previous lease agreement you have.