In a lease until August 1 2010. Just found out landlord isn't paying mortgage on property and is immediately trying to sell in a short-sale pre-foreclosure. Real estate agent said that lease won't be part of the P&S agreement and that I have to work out getting my deposit back from the landlord directly.
Does the lease legally have to part of the P&S agreement and is the new owner obligated to honor it?
Also, since the landlord is in financial trouble how can we guarantee that we get our deposit back since it's more than $3K ?
Don't take legal advice from your landlord's real estate agent! The ownership interest in the property is separate and distinct from the leasehold interest in the property. If you have a lease with the landlord and they have not been paying the mortgage, your landlord has breached the covenant of quiet enjoyment. That gives you a cause of action against your landlord. Unfortunately, a cause of action does not guarantee that you will recover damages, because people who are not paying their mortgages generally are on the verge of bankruptcy and don't have assets you can recover.
Short sales are notoriously finicky and take a long time to get lender approval, and lenders have absolutely no motivation to agree to short sales because then they have to show the loss on their books. I would suggest that if and when the property is sold it will be sold subject to your lease, and if the lender or your landlord wants to get out of the lease, then they can pay you. There is no consideration for the lease ending early as things stand right now. You can enter an "accord and satisfaction" to create a modification of the agreement. For example, you could require that your landlord compensate you for the time and trouble of moving. What the terms of that accord and satisfaction encompass is up to you.
The lease should be part of the purchase and sale agreement, or your landlord should compensate you. The new owner has to be aware that there is a tenant - you.
Theoretically your deposit is a separate matter all together. The deposit rules in WA are found at RCW 59 18 260, 270 and 280. They don't have to return the deposit until you have been out for 14 days. They have to give you a written agreement with a walk through checklist and tell you where the deposit is being held, and it has to be in a financial institution, not their mattress.
If you don't get your deposit back you can sue them in small claims. You could also sue them in small claims for the tenancy you were unable to enjoy if you are dispossessed of your leasehold before August 2010.
Notices of Trustee's Sales are public documents, You can contact the Assessor Treasurer of your county and find out exactly what is going on with this property. I have written a Legal Guide on this website about renter's rights in foreclosed properties (which are protected by federal law) and that might be useful information for you.
Hope this helps. Elizabeth Powell
From a tenant's standpoint, a short sale is no different than any other sale. If you have a lease, it remains in effect until it expires by its own terms. That can only be changed if you agree to some modification. The new landord will be responsible for complying with all the lease terms, including return of deposit. The deposit is supposed to be in a separate trust account and the new landlord must notify you what account it is in.
You should consult an attorney about your specific situation.
PLEASE BE ADVISED: This answer and any information contained herein is not intended to be treated, and should not be construed, as legal advice. Rather, this answer is offered solely for general information purposes. This answer does not create an attorney-client relationship, nor does it create any kind of legal relationship, duty, or privilege. This attorney is licensed only in Washington.
From a tenant's standpoint, a short sale is no different than any other sale. If you have a lease, it remains in effect until it expires by its own terms. That can only be changed if you agree to some modification. The new landord will be responsible for complying with all the lease terms, including return of deposit. The deposit is supposed to be in a separate trust account and the new landlord must notify you what account it is in.
You should consult an attorney about your specific situation.
PLEASE BE ADVISED: This answer and any information contained herein is not intended to be treated, and should not be construed, as legal advice. Rather, this answer is offered solely for general information purposes. This answer does not create an attorney-client relationship, nor does it create any kind of legal relationship, duty, or privilege. This attorney is licensed only in Washington.
