Does a bank require that a landlord live in newly purchased forclosed home?
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Does a bank require that a landlord live in newly purchased forclosed home?
My husband and I are renting a home which was recently purchased by our landlord. The house has been vacant for some time and we have already signed the contract and expected to move in a week. Our landlord has now approached us saying that the mortgage company he received the loan from requires him to live in the home for at least 6 months to a year. Is this true? Does our landlord have to live there before being able to rent the home?
Asked on May 22, 2016 under Real Estate Law, Maryland
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
A bank *can* require this--it's not a legal obligation, but banks are allowed to put restrictions or conditions on their loans, since ultimately, it is voluntary on the part of banks to make loans; that is, the bank freely chooses to make loans (they don't have to) and so can choose the conditions for the loan. Banks do give often different loans for a primary residence vs an investment prperty, and the primary residence loans are often more favorable--your landlord could have applied for a primary residence loan, which would require that he actually use it as a residence, at least for some period of time.
If you have a signed lease however, the landlord would be in breach of lease if he removes you to use the home as a primary residence, and you could sue him for compensation, such as any additional costs you incur due to this.
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