What happens when a landlord and a tenant have a rent to own agreement and the landlord defaults on the mortgage?

My landlord lives in CA, I live in CO. Before I moved into his property he had hired my husband and I to act as property managers since he lives out of state. When I ended up moving into the house, we entered into a verbal agreement (he has been sending the paperwork for 3 years now) that a portion of our monthly rent would be applied towards ownership of the property. The property is now in foreclosure. I have all my rent receipts, invoices, etc. Where do we now stand?

Asked on March 17, 2011 under Real Estate Law, Colorado

Answers:

Denise Ferguson / Denise Ferguson Attorney At Law

Answered 9 years ago | Contributor

The Statute of Frauds applies. All real estate transactions must be in writing to be enforced. You really need to consult with an attorney in order to try to salvage anything. You may find that your verbal agreement was worth nothing and you are out the money because you did not have a written agreement.

 

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

1) An oral agreement is generally enforceable, though some contracts or agreements must be in writing to be enforced. It appears that in Colorado, it may be the case that a lease or lease to own agreement over a certain dollar amount of monthly payment may have to be in writing to be enforced; you should consult with a local RE attorney about this.

2) Assuming that the agreement is enforcable, you have a cause of action against the landlord for breach of it if he can no longer convey the ownership or title. Unforunately, you cannot  get the property itself if it's been foreclosed upon--the bank's security interest through the mortgage supercedes any interest you may have had. So you may be able to sue the landlord for monetary damages--and that's another thing to discuss with an attorney--but most likely, you cannot enforce the agreement so as to get the property.

3) If the property has been foreclosed, you may be able to buy it from the bank or lender at a favorable rate, and that's something worth discussing with the institution.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.