ot: When your landlord defaults

[urbanrealtor]

Here is a guide to what I would do if presented with a notice of default or trustee sale on the place I was renting.

This was begun as a response to another thread but that thread was deleted for some reason.

It is not intended as legal advice, just a description of my course of action should it happen to me. It is written in the second person because I copied and pasted from an email I sent to a family member. I suggested that they contact me because, as an agent, I am licensed to negotiate real property contracts (including leases, rental agreements, and oral arrangements). I would not necessarily do that for you.

In addition to what I suggested to my niece below, here are some free resources:
http://www.dca.ca.gov/publications/landlordbook/index.shtml

Also, I recommend this book:

Again, I am not an attorney, and this is not legal advice. Some of it is not even legal. However, I do feel it is practical.

1: Email (don’t call) if possible, the landlord. Advise that you received this notice. Explain that you don’t feel comfortable paying further rent until you have been told what will be happening with your deposit. Remind them the deposit it is YOUR property and they are just holding it. Explain that you need an answer in writing and that you also want an explanation about whether they will be reinstating their loan.

2: If they don’t give you a satisfactory answer, skip rent. If they do give you a satisfactory answer, still skip it. They may think that promising the deposit will get rent from you but they know they wont give the deposit and you know you won’t pay rent. It is just a delaying tactic to make eviction less enticing or fruitful for them. A cheapie eviction costs $750-$1000 at a minimum.

3: Change your locks. Immediately. You can probably do that yourself for like 10-25 bucks.

4: If the landlord states that he is reinstating the loan, he is probably lying. I strongly recommend not doing any of this over the phone. If they serve you with a 3-day pay or quit notice, please contact me. It might be bullshit.

5: When the bank does repo the property (and rest assured they will), the new asset manager or agent will offer cash for keys. By law, they have to give you 60 days of free rent. If they offer you more than 2 months of rent, then maybe it is worth it. Otherwise just stay there and save money. They can’t even start the eviction until 60 days have past. Once they start it, it will take 6-16 weeks to complete it.

[UCGal]

Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.

[UCGal]

Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.

[UCGal]

Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.

[UCGal]

Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.

[UCGal]

Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.

[urbanrealtor]

[quote=UCGal]Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.[/quote]

Your comment is accurate.

My advice makes no claims on morality.

My only defense here, is that residential rental real estate is truly the most savage side of real property that I have ever seen. That is saying a lot. There are very explicit laws that are violated as a matter of regular protocol and rights that are ignored publicly. Tenants’ rights are one of few actual causes that I believe in.
Lets take an example:
A large local rental management firm has a policy that they deduct a certain amount from a security deposit for every year of residency. This is done to offset the costs of paint and wear and tear. Even though this is in clear violation of the law (deposits are for damage, rent, or cleaning) this large firm (lets call them BON-AM) does this for hundreds of people every day. When confronted about this practice (by my friend-an agent) their general counsel explained that having to lose the occasional lawsuit was worth it due to all the revenue from the deposits.
Lets take another example:
Another large local firm (Lets call them Bootopia) managed a property my buyer lived in. When the property was seized by the bank (for non-payment) they sent the tenant to collection for non-payment of rent. This was illegal because they had no management agreement with the new owner (the bank) but my client’s credit was still affected.

This kind of crap happens all the time and nobody ever does anything about it.

Putting that differently, this is the wild west of real estate. If gunfights and vendettas are happening all around, I don’t think it is particularly immoral to bring a gun or to be prepared to shoot to defend yourself.

[urbanrealtor]

[quote=UCGal]Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.[/quote]

Your comment is accurate.

My advice makes no claims on morality.

My only defense here, is that residential rental real estate is truly the most savage side of real property that I have ever seen. That is saying a lot. There are very explicit laws that are violated as a matter of regular protocol and rights that are ignored publicly. Tenants’ rights are one of few actual causes that I believe in.
Lets take an example:
A large local rental management firm has a policy that they deduct a certain amount from a security deposit for every year of residency. This is done to offset the costs of paint and wear and tear. Even though this is in clear violation of the law (deposits are for damage, rent, or cleaning) this large firm (lets call them BON-AM) does this for hundreds of people every day. When confronted about this practice (by my friend-an agent) their general counsel explained that having to lose the occasional lawsuit was worth it due to all the revenue from the deposits.
Lets take another example:
Another large local firm (Lets call them Bootopia) managed a property my buyer lived in. When the property was seized by the bank (for non-payment) they sent the tenant to collection for non-payment of rent. This was illegal because they had no management agreement with the new owner (the bank) but my client’s credit was still affected.

This kind of crap happens all the time and nobody ever does anything about it.

Putting that differently, this is the wild west of real estate. If gunfights and vendettas are happening all around, I don’t think it is particularly immoral to bring a gun or to be prepared to shoot to defend yourself.

[urbanrealtor]

[quote=UCGal]Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.[/quote]

Your comment is accurate.

My advice makes no claims on morality.

My only defense here, is that residential rental real estate is truly the most savage side of real property that I have ever seen. That is saying a lot. There are very explicit laws that are violated as a matter of regular protocol and rights that are ignored publicly. Tenants’ rights are one of few actual causes that I believe in.
Lets take an example:
A large local rental management firm has a policy that they deduct a certain amount from a security deposit for every year of residency. This is done to offset the costs of paint and wear and tear. Even though this is in clear violation of the law (deposits are for damage, rent, or cleaning) this large firm (lets call them BON-AM) does this for hundreds of people every day. When confronted about this practice (by my friend-an agent) their general counsel explained that having to lose the occasional lawsuit was worth it due to all the revenue from the deposits.
Lets take another example:
Another large local firm (Lets call them Bootopia) managed a property my buyer lived in. When the property was seized by the bank (for non-payment) they sent the tenant to collection for non-payment of rent. This was illegal because they had no management agreement with the new owner (the bank) but my client’s credit was still affected.

This kind of crap happens all the time and nobody ever does anything about it.

Putting that differently, this is the wild west of real estate. If gunfights and vendettas are happening all around, I don’t think it is particularly immoral to bring a gun or to be prepared to shoot to defend yourself.

[urbanrealtor]

[quote=UCGal]Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.[/quote]

Your comment is accurate.

My advice makes no claims on morality.

My only defense here, is that residential rental real estate is truly the most savage side of real property that I have ever seen. That is saying a lot. There are very explicit laws that are violated as a matter of regular protocol and rights that are ignored publicly. Tenants’ rights are one of few actual causes that I believe in.
Lets take an example:
A large local rental management firm has a policy that they deduct a certain amount from a security deposit for every year of residency. This is done to offset the costs of paint and wear and tear. Even though this is in clear violation of the law (deposits are for damage, rent, or cleaning) this large firm (lets call them BON-AM) does this for hundreds of people every day. When confronted about this practice (by my friend-an agent) their general counsel explained that having to lose the occasional lawsuit was worth it due to all the revenue from the deposits.
Lets take another example:
Another large local firm (Lets call them Bootopia) managed a property my buyer lived in. When the property was seized by the bank (for non-payment) they sent the tenant to collection for non-payment of rent. This was illegal because they had no management agreement with the new owner (the bank) but my client’s credit was still affected.

This kind of crap happens all the time and nobody ever does anything about it.

Putting that differently, this is the wild west of real estate. If gunfights and vendettas are happening all around, I don’t think it is particularly immoral to bring a gun or to be prepared to shoot to defend yourself.

[urbanrealtor]

[quote=UCGal]Your advice is practical… but it presents a moral hazard.

Tenants sign legal contracts in the form or rental agreements or leases. They agree to pay a specific amount in return for living in the apartment or house. If they stop paying, isn’t it the same as someone who buys a house, and stops paying the mortgage?

The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.

Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?

Just my 2 cents.[/quote]

Your comment is accurate.

My advice makes no claims on morality.

My only defense here, is that residential rental real estate is truly the most savage side of real property that I have ever seen. That is saying a lot. There are very explicit laws that are violated as a matter of regular protocol and rights that are ignored publicly. Tenants’ rights are one of few actual causes that I believe in.
Lets take an example:
A large local rental management firm has a policy that they deduct a certain amount from a security deposit for every year of residency. This is done to offset the costs of paint and wear and tear. Even though this is in clear violation of the law (deposits are for damage, rent, or cleaning) this large firm (lets call them BON-AM) does this for hundreds of people every day. When confronted about this practice (by my friend-an agent) their general counsel explained that having to lose the occasional lawsuit was worth it due to all the revenue from the deposits.
Lets take another example:
Another large local firm (Lets call them Bootopia) managed a property my buyer lived in. When the property was seized by the bank (for non-payment) they sent the tenant to collection for non-payment of rent. This was illegal because they had no management agreement with the new owner (the bank) but my client’s credit was still affected.

This kind of crap happens all the time and nobody ever does anything about it.

Putting that differently, this is the wild west of real estate. If gunfights and vendettas are happening all around, I don’t think it is particularly immoral to bring a gun or to be prepared to shoot to defend yourself.

[jpinpb]

[quote=UCGal]Your advice is practical… but it presents a moral hazard.
[/quote]

presents a moral hazard.

As opposed to all the people walking on their mortgage. I mean, I won’t deny it’s a moral hazard, but seems commonplace nowadays. It’s almost losing its meaning.

[jpinpb]

[quote=UCGal]Your advice is practical… but it presents a moral hazard.
[/quote]

presents a moral hazard.

As opposed to all the people walking on their mortgage. I mean, I won’t deny it’s a moral hazard, but seems commonplace nowadays. It’s almost losing its meaning.

[jpinpb]

[quote=UCGal]Your advice is practical… but it presents a moral hazard.
[/quote]

presents a moral hazard.

As opposed to all the people walking on their mortgage. I mean, I won’t deny it’s a moral hazard, but seems commonplace nowadays. It’s almost losing its meaning.

[jpinpb]

[quote=UCGal]Your advice is practical… but it presents a moral hazard.
[/quote]

presents a moral hazard.

As opposed to all the people walking on their mortgage. I mean, I won’t deny it’s a moral hazard, but seems commonplace nowadays. It’s almost losing its meaning.

[Author]

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