Is it legal for a homeowner to lease out their home that is being forclosed on?

Question

I started leasing a house from my landlord 11/09/07, she stopped paying the Mortgage on 12/01/08. I've been payong $1500 every month for rent. In April I found out the house is being foreclosed on. I signed a 1 year lease. There are still 3 more months to go on the lease.Is the lease voided due to her neglect? She also just filed Bankruptcy 7/17/08.

Answer 1

Yes it is legal--she is still the owner and until the title changes hands she has every right to do with it as she sees fit.  The lease is not voided due to a pending foreclosure, however, the lease would disappear if the property should go foreclosure sale and somebody other than the current owner buys it.  Also, your deposit disappears with the lease(the new owner is not responsible for it) and you would probably have to sue the old owner to recover the deposit.  A lot of people in your situation quit paying the rent because they know that they are going to lose the deposit and figure that things balance out that way--no deposit returned versus no rent paid.  Good Luck!!

Answer 2

As Dizzy says, you've got a valid lease. And even when ownership changes--if she were to sell the property to someone else--in most jurisdictions the lease remains in effect for both the tenant and the new owner.

And it's legal for her to lease out a home under the conditions you describe. For instance, it's always possible that she could come up with the money to bring the house out of foreclosure. Or she might sell it to someone else...also perfectly legal and ethical.

You ask whether the lease is voided "due to her neglect." Well, if the lease provides that the owner's failure to pay a mortgage is grounds for terminating the lease, then you're OK. Otherwise, no. And you refer to "her neglect" as if she somehow overlooked the notices from her lender. Maybe she was in denial; maybe she thought she had a solution; maybe she's been working on a short sale. But it's a stretch to call it "her neglect."

You can check with a lawyer. However, realistically, you should also be looking for a new place to live.

Good luck.

Answer 3

The lease is voided when she’s no longer the legal owner. Until then, she can do whatever she wants with a house she owns.

Answer 4

Also keep in mind that if the house is sold at a foreclosure sale, the Sheriff/Constable will post a notice to vacate on your door with a move out date.  Do not pay anymore rent after that notice is posted.

Her filing bankruptcy may have stopped the foreclosure proceedings.

I would move out at the end of the lease.