BobS
I’d like to propose a “third way” strategy for renters and about-to-be-foreclosed upon landlords.
Instead of the typical adversarial relationship these two parties see themselves as being in, the fact is that they need each other at this critical time. The owner especially needs the tenant to keep paying rent right up to the time he loses ownership. The tenant presumably wants to keep on renting, but is understandably worried about getting his deposit back, plus having to move abruptly.
The landlord should propose a deal at this point. First, make full disclosure that foreclosure will occur, outline the minimum timeline, but point out that it could be much longer given the backup lenders face. To reassure the tenant that they will get their deposit back, reduce the rent for the next 3 months by exactly 1/3 of the current deposit. Do this in writing, as an ammendment to the contract.
Advantage to owner: tenant stays a while & rightfully gets back their deposit. No need to have a vacancy for a while or unethically con some dupe into renting for a few months.
Advantage to tenant: increased cash flow, assurance of deposit return, freedom from having to clean up or fix any damage already existing on property. Also, high possibility of “cash for keys” upon leaving. Altogether a win-win for all parties…even the lender who can immediately take over a REO that has not been vacant for a long period and possibly vandalized.
What do you think Piggs…especially lawyers and landlords?
