I need advice on rent skimming landlord

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Submitted by jrsygirl9 on August 28, 2008 - 10:46pm

We signed a one year lease may 15 08. Moved in june 1. Owner is an real estate "investor" and purchased the property 11/30/07. he has not made a mortgage payment since 4/1/08.

Every which way i read this "rent skimming" law he violates it. he has no excuse for not paying. In fact he says he has the money but is choosing to not pay because he wants to see if he can get the bank to modify the loan. I don't believe him because when I called to tell him there are a pre-forclosure inspector at the house he said his CPA embezzeled from him and he was fixing it. Six weeks later the NOD was filed (8/19/08).

My husband and several friends say don't pay him another dime. I want to stay in this house. Infact in our lease it states he must offer the house to us first because I want to buy it.

Does anyone know the legality of placing it in escrow because I don't want him to satisfy the loan and then kick us out for violating the lease. i also don't want to throw away good money because he is upside down 170k on this property. I don't see him fixing it.

Am I legally obligated to pay even though he is skimming? Can i legally put it in escrow so there ae no issues?

Please advise asap as this guys wants to come up tomorrow and pick up the rent check (8/29/08) and it isn't due until the 3rd.

thank you

Submitted by jrsygirl9 on September 17, 2008 - 6:31am.

One last note... We agreed to withdrawl the sept rent from escrow and pay to him in exchange for him signing the short sale offer. We have already been in contact with the bank so (small investment bank- easy to get through to negotiator) looks like we will own this property in about 30 days.

the rest of the rent is being escrowed should there be a hold up with the sale. No one gets any money until the transaction is complete. Once we own the house he gets any rent monies due.

On a personal note... I think the law that allows LL's to collect rent on a foreclosing property with no intent to resolve the loan is pretty crappy. That law should be changed.

Submitted by jrsygirl9 on September 17, 2008 - 6:31am.

One last note... We agreed to withdrawl the sept rent from escrow and pay to him in exchange for him signing the short sale offer. We have already been in contact with the bank so (small investment bank- easy to get through to negotiator) looks like we will own this property in about 30 days.

the rest of the rent is being escrowed should there be a hold up with the sale. No one gets any money until the transaction is complete. Once we own the house he gets any rent monies due.

On a personal note... I think the law that allows LL's to collect rent on a foreclosing property with no intent to resolve the loan is pretty crappy. That law should be changed.

Submitted by sdrealtor on September 17, 2008 - 7:03am.

Why dont you send the address of the property and price to me and SD Realtor via the private message function on this board? I would be happy to provide you with an opinion of value and suspect Adam (SD R) would also. A couple of price opinions from grumpy, bearish realtors could help you evaluate whether you should buy it or not.

Submitted by jrsygirl9 on September 24, 2008 - 10:49am.

thank you for the offer. i had completed a FHA approved appraisal prior to putting in the offer so i knew where i was at with this property. The BPO only came in 20k above the appraisal. We negotiated it out and this deal should close rather quickly. i will just be very happy when i am done and rid of the drama of it all. I will especially be happy of ridding our LL of collecting more money from us, and not having to deal with his stupid antics anymore.

Thanks again for the offer and the support!

Submitted by The OC Scam on September 24, 2008 - 11:01am.

There is no law allowing a landlord to collect on a foreclosure. The law is if the landlord has a home which is in default within 12 months prior before you move as a renter and start paying rent and landlord continues to not make any house payment then the rent skimming law is behind. I know because I too bought my house from a small bank in Texas after my landlord vanished 1 year before after I explain the law to her. She hired a lawyer and I did as well in the end she couldn't do anything so I didn't pay any rent and used the money as part of my large down payment. There is more to the story but I won't get into it again because i start to fell happy and stuff...

Submitted by SarahM on September 26, 2008 - 12:05pm.

Hello! I just went on http://www.checkmylandlord.net and checked to see if my landlord’s been paying the loan on the house I’m renting, there was no charge. You can also order a report and see if your neighbors’ houses have gone into foreclosure. I guess this decreases the value of your house. Just thought this could help you all in the future.

Submitted by OhioLandlord on July 13, 2009 - 7:40pm.

I'll put this simply.

The fact that the landlord may not be paying his/her mortgage is not a valid defense for a non-payment breach of a lease contract. His/her damages will be all rent owed plus late charges and breach of contract fees.

At one point I had 10 properties in foreclosure and 2 different tenants skip, with the reason that they didn't want to risk being put on the street in the event of a sheriff's sale. Both tenants lost the second cause of action for damages and are still paying via a garnishment.

Some landlords are not that diligent with getting paid from their tenants, so you might get lucky when you run.

Submitted by harvey on July 13, 2009 - 9:05pm.

Wickedheart wrote:
You are quibbling over semantics.

That line made me chuckle...isn't that what every legal question is about?

Submitted by briansd1 on July 13, 2009 - 10:18pm.

OhioLandlord wrote:
I'll put this simply.

The fact that the landlord may not be paying his/her mortgage is not a valid defense for a non-payment breach of a lease contract. His/her damages will be all rent owed plus late charges and breach of contract fees.

At one point I had 10 properties in foreclosure and 2 different tenants skip, with the reason that they didn't want to risk being put on the street in the event of a sheriff's sale. Both tenants lost the second cause of action for damages and are still paying via a garnishment.

Some landlords are not that diligent with getting paid from their tenants, so you might get lucky when you run.

Not true.

In order to garnish someone's wages you have to get a judgment.

In order to get a judgment, the landlord has to sue to tenant AND win.

And even if the landlord wins the lawsuit and obtains a judgment he has to take further collections action.

It costs money to sue and it cost money to pursue bad debt. Money the landlord likely doesn't have if he's in foreclosure.

The tenant should, of course, respond to any lawsuit and appear in court to defend himself.

If the tenant can show good cause why he didn't pay rent (fraud on the part of the landlord, lack of maintenance, etc...), it's unlikely the judge would award any damages to the landlord.

The judge may order that rent be paid with interest but that would be the most the landlord would get.

The tenant's wife should appear in court and cry for her family. That would be a good stunt to pull... hahaha.

If I were the tenant and found out that the landlord was rent skimming, I would stop payment immediately and contact the landlord to negotiate a sweat deal. The way I see it, the money is coming from me, so if the landlord is stiffing the bank, he should cut me on the deal also.

If the landlord doesn't deal, then I would contact the lender. The mortgage note likely has an assignment of rents clause that allows the lender to collect rents directly from the tenant in case of default.

If the lender then sends me a letter asking me to no longer direct rent to the landlord, then I've got my ass covered.

Now, we all know that banks are being bailed-out by us, generous taxpayers, so there's no need to pay them. They don't have the manpower or the systems in place to collect outside of their routine anyway. ;)

It's a dog eat dog world out there.

The banks are coercing the government for money, else they'll collapse the economy. The short-sellers and homeowners seeking modifications are also trying to coerce deals.

Shouldn't the renters get in on the action also?

Submitted by temeculaguy on July 13, 2009 - 10:35pm.

This is an old thread, but the first piece of advice still stands. No judge will rule against a tennant trying to protect themsleves and not looking to get anything for free, nor will any god, nor will karma. I gave that advice a while ago because when my landlord stopped paying the mortgage I was given similar advice. I was tempted with a few months free rent, but opted to make myself whole, lose nothing and gain nothing, then move on. Karma rewarded me for my honorable behavior, a younger TG would have toyed with Karma, then gotten F(*&^ed by her. I like being older, wiser TG, with the exception of the declining vision and obvious prostate issues of aging, youth and greed is is an affliction, not an attribute.

Submitted by briansd1 on July 13, 2009 - 10:56pm.

What is it, TG? Duty, Honor, Country. Add pride to that and walk with you head held high. It's hard to do when you're poor.

I don't see the old men on Wall Street doing anything honorable. All that counts is greed and fear.

Submitted by temeculaguy on July 13, 2009 - 11:28pm.

None of the above. On another thread regarding the surgeon general, you talked about being an example, well, be one. Having the ability to avoid the temptation of apple pie is worthless when you cannot resist the temptation of taking something that you didn't earn.

What is it, I have come to understand karma, I have come to the point in my journey that I realize how important it is to love yourself, be the guy you look up to and understand that riches will never bring you respect. I have a dedicated windex bottle and roll of paper towels near my bathroom mirror, just to clean my mirror after kissing myself in it, cause I loves me some me and I kiss myself often. In the real world, I'm a hero, every guy wants to be me, I wasn't born this way, I was given good advice and it is my obligation to relay that advice to others, nothing I say is original, it is all recycled. Giving people advice to be the same way as those you have no respect for will give them the same results.

brian, it's in you brother, I see the internal conflicts in some of your posts. You despise greed and fear, but it takes over sometimes. Watch out for envy as well. Just wake up tomorrow and be the best person you can be, give more than you take, and at the end of the day, if you don't like it, if karma doesn't reward you, go back to being part of the problem, I'll still accept you, because I'll know you still have it in you, you just haven't figured it out yet.

Submitted by CA renter on July 14, 2009 - 12:55am.

Love your posts, TG! :)

Submitted by scaredyclassic on July 14, 2009 - 8:40am.

not sure. there seem to be a lot of very successful people int he world who got that way from screwing people over.

Submitted by briansd1 on July 14, 2009 - 1:30pm.

Love your posts too, TG. You have a knack for writing.

You could be a motivational speaker or screen writer. I love the windex and mirror imagery.

Back to the OP's question about rent. I feel that not giving the OP a range of options would be like a teenager going to a counselor with a love-and-sex quandary and not get the contraception option.

Submitted by doofrat on July 14, 2009 - 4:07pm.

OhioLandlord wrote:

Some landlords are not that diligent with getting paid from their tenants, so you might get lucky when you run.

And from the way you wrote your comment, it looks like some banks apparently weren't that diligent with getting paid from you either?!?

Submitted by ElisabethinCA on May 26, 2011 - 7:14pm.

I was thinking the same thing. I know this is a really old post, but I could not believe the arrogance that he/she states he had at one time "10 properties in foreclosure" yet he sued 2 tenants for moving and not paying the rent. Like they were the bad ones. What a pig. You made a contract to pay the mortgage on all the properties you purchased, yet you just stopped paying, kept collecting rent from your tenants, expect the taxpayers to clean up your financial mess and your tenants to "just deal with it". People like you deserve everything bad that happens in life. You are the kind of people this country doesn't need. I would rather keep the illegals that come here to work hard and make a living for their families, then people like you who take advantage at every turn and use the system. I am in CA and have a landlord that did the same thing. I wouldn't have to move and incur the expenses of moving while dealing with an illness I have had for 2 years had they paid the mortgage with the rent I gave them. I stopped paying the rent. I would literally be living in my car while they took my rent and bought food and paid their bills, except the mortgage. Take me to court. Go ahead. I will sue for moving expenses, stress, medical bills, and everything I can think of. I was a great tenant for 5 years. This is the 2nd time they stopped paying the mortgage. It isn't just tenants that are bad. Landlords are just as bad and worse sometimes.

Submitted by urbanrealtor on May 27, 2011 - 9:40am.

ElisabethinCA wrote:
I was thinking the same thing. I know this is a really old post, but I could not believe the arrogance that he/she states he had at one time "10 properties in foreclosure" yet he sued 2 tenants for moving and not paying the rent. Like they were the bad ones. What a pig. You made a contract to pay the mortgage on all the properties you purchased, yet you just stopped paying, kept collecting rent from your tenants, expect the taxpayers to clean up your financial mess and your tenants to "just deal with it". People like you deserve everything bad that happens in life. You are the kind of people this country doesn't need. I would rather keep the illegals that come here to work hard and make a living for their families, then people like you who take advantage at every turn and use the system. I am in CA and have a landlord that did the same thing. I wouldn't have to move and incur the expenses of moving while dealing with an illness I have had for 2 years had they paid the mortgage with the rent I gave them. I stopped paying the rent. I would literally be living in my car while they took my rent and bought food and paid their bills, except the mortgage. Take me to court. Go ahead. I will sue for moving expenses, stress, medical bills, and everything I can think of. I was a great tenant for 5 years. This is the 2nd time they stopped paying the mortgage. It isn't just tenants that are bad. Landlords are just as bad and worse sometimes.

Ethically, I am not fond of collecting rent and not paying mortgage.
However, it is not illegal per se.
Collecting rent when you don't own it (like after the repo) is rent skimming.
Collecting and not paying in the first 12 months of ownership is rent skimming.
However, the rent contract and the mortgage contract are separate.
If I have a work contract with my boss and a credit card contract with my bank, it is not okay for the boss to stop paying me because I am behind on my credit card (even if cc non-payment will likely result in a wage garnishment down the road).
Same logic applies here.
I briefly managed a rental for a client and he stopped paying.
I thought this might happen and so I kept the tenant's deposit in my trust account.
When the repo happened, I gave the tenant back their deposit and the bank gave them 120 days free and a couple thousand for moving without damaging the place.
I was not happy about this but I was upfront from the beginning with the tenant and I treated them fairly from the beginning.
They came out ahead in the end.

Also, banks often advise borrowers to not pay if they are in the middle of a modification.

That is true even if they have tenants.

Submitted by blahblahblah on May 27, 2011 - 10:03am.

Hahahaha these rent skimmers are going to have the last laugh. I know a couple in Arizona that defaulted on two homes while collecting rent on one of them and saving their mortgage payments. It took the banks a couple of years to handle the foreclosures and they banked huge money during that time. At the end, their credit was ruined but no problem, they had accumulated enough cash to purchase a beautiful home without a mortgage. They are now living the high-life mortgage free. He is about 33.

Back to work suckers!

Submitted by bearishgurl on May 27, 2011 - 10:29am.

CONCHO wrote:
Hahahaha these rent skimmers are going to have the last laugh. I know a couple in Arizona that defaulted on two homes while collecting rent on one of them and saving their mortgage payments. It took the banks a couple of years to handle the foreclosures and they banked huge money during that time. At the end, their credit was ruined but no problem, they had accumulated enough cash to purchase a beautiful home without a mortgage. They are now living the high-life mortgage free. He is about 33.

Back to work suckers!

CONCHO, it is entirely possible in the lesser-desired areas in AZ to purchase a sub $100K house (from a couple of years of "skimmed rent"), but NOT in coastal CA. More power to your "friends" who are living the "high life" in 115-deg heat! Having driven thru that lunar landscape on several occasions, I wouldn't exactly call living there (in a cheaper house, to wit) the "high life," lol!

Submitted by blahblahblah on May 27, 2011 - 11:32am.

bearishgurl wrote:
I wouldn't exactly call living there (in a cheaper house, to wit) the "high life," lol!

Hahaha me neither but they seem to like it! I just can't get over the morality of the whole thing, they're nice people but it makes me wonder...

Submitted by bearishgurl on May 27, 2011 - 11:40am.

CONCHO wrote:
bearishgurl wrote:
I wouldn't exactly call living there (in a cheaper house, to wit) the "high life," lol!

Hahaha me neither but they seem to like it! I just can't get over the morality of the whole thing, they're nice people but it makes me wonder...

Due to having no mtg, maybe they now have enough "discretionary" income to "get out of dodge" on the hottest weekends. That's what I would do if I were in that "situation."

Remember, every 9th Southwest Airlines RT is FREE! :=]

Submitted by CA renter on May 27, 2011 - 5:20pm.

CONCHO wrote:
bearishgurl wrote:
I wouldn't exactly call living there (in a cheaper house, to wit) the "high life," lol!

Hahaha me neither but they seem to like it! I just can't get over the morality of the whole thing, they're nice people but it makes me wonder...

It makes me wonder, too, concho. :(

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