I got to say I do find it ironic that as the blogger responsible for the Extreme Flipper series, I myself in now entangled by an Extremely stupid Flipper, San Diego style.
Foreclosures are happening to all the upside down investors who have rentals. I would highly recommend you find out which bank owns the property (call title company for property profile). Tell the property manager to call the bank and set up an escrow account to pay the bank directly. I’ll bet every dollar you pay for rent is not being paid to the mortgage.
If you pay rent to the bank, couldn’t the owner evict you for non-payment of rent? The contract is to pay the landlord.
Since the landlord is cash-flow negative, paying the rent to the bank won’t cover the mortgage anyway, so it won’t eliminate the NOD. To eliminate NOD, you must pay the balance due. I’ve heard of banks which send bank partial payments, and file a NOD.
Best advice – See the lawyer first. $ 200 is a small price to pay to find out what your rights are.
My gut tells me, regardless of what the PM says, they are liable in some capacity. Just because they didn’t know the situation doesn’t mean they shouldn’t have known. PM’s are required to be licensed real estate agents (unless they are the property owner themselves) and as such, they fall under the laws regarding real estate transactions.
The owner of the property sounds like he committed fraud in not disclosing the status of the property or his financial situation to you or his PM. He may be liable for your costs of moving as well as other damages, including legal fees.
This oftentimes is a common scam: The owner goes into foreclosure for six months or so and continues to collect rent, knowing all the while the property is going back to the bank. Take six properties and multiply that by six months rent and you have three years of income without a dime invested. A tidy sum for a scumbag.
I would not pay another cent in rent until I talked with the attorney. I would also talk to the bank to see if there is something you could work out on the rent while the property is being processed through foreclosure. Maybe negotiate a new lease with the same term as your current one. Banks don’t like being property managers but it will defray some of their costs if you can cut a new deal with them.
since there’s 7 properties involved, and we know the address of 6 of them, should we attempt contact and have all 6 renters go to the lawyer together? as in there’s added strength in number.
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