What are a tenant’s rights if their landlord stopped paying the mortgage on the property before renting it out?

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What are a tenant’s rights if their landlord stopped paying the mortgage on the property before renting it out?

We have been renting an houe for 6 months. Now we recieved a legal notice this week stating that the owner or landlord has not been paying his mortage and so the home is in foreclosure; it will be auctioned off in 4 months. The owner stopped paying the mortgage before we even rented the home and the property management company who rented it to us knew about it. Is this fraud and can we sue either the company or the home owner? We signed a year lease.

Asked on April 13, 2012 under Real Estate Law, Washington

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If, as you write, the landlord and/or his property management company knew the landlord was in default (had stopped paying) his mortgage prior to renting to you, that failure to disclose that obviously critical fact, which any reasonable renter would have wanted to know (and reasonably expected to know) might be fraud. If it is fraud, it may provide grounds to terminate the lease without penalty and/or seek monetary compensation. (For example: terminate the lease and possibly get the moving costs to move out.) Since you may well have a cause of action, it would be worthwhile for you to meet with an attorney about this, to discuss the situation in more detail and evaluate your options.


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