Is a lease valid if the landlord was behind in their mortgage payments at the time it was signed?

Our landlord is in foreclosure. They have posession of the house for about another 3 months. However we found out that they were 3 months behind when they signed the lease. Isn’t that a false legal document? What are our rights?

Asked on September 1, 2012 under Real Estate Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

No, the lease is valid--the landlord's status vis-a-vis his or her mortgage payment does not affect his or her ability to enter into a lease; as long as the landlord was still in possession and had not been foreclosed upon at the time, he or she could enter into the lease.

Once the home is foreclosed upon and acquired by someone new--either the bank, or anyone else who buys it at the foreclosure sale--then you will still be able to stay for at least 90 days, or until your lease expires, whichever comes later. (If the home is bought by somone who intends to live in it, you can only get 90 days, not the balance of the lease; the balance of the lease applies if the home is bought by a LLC or corporation, or as an investment or rental property.)

Alternately, once the foreclosure occurs, if you want to move out at that time, you can--while you have the right to stay longer if you want to, you are not required to. Since the lease will be terminated by the landlord's loss of possession, you could take the opportunity to leave.

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Under the laws of all states in this country, the lease that you have with your landlord is valid regardless of the fact that he or she may have been behind in the mortgage payments at the time you entered into the lease and afterwards. What matters is that your landlord is on legal title to the rental.

Your rights as the tenants of the unit are to continue paying on the lease. If the property is foreclosed upon, so long as you are current on your lease you get to remain in the rental until the lease's terms expire. If the lease is a month-to-month lease, the new owner post foreclosure must give you at least 90 days written notice to vacate under 2010 federal law on the subject.


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