How can I protect myself from renting a home in foreclosure?
My family and I are relocating to Arizona and we are afraid that we will have a hard time renting a home due to the high foreclosure rate. We are aware that many homeowners and investors are attempting to rent out homes that are being repossesed.
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April 2nd, 2010 at 7:38 am
Unfortunately, there is no easy answer. Under the circumstances, the right of a lender to foreclose will trump your rights as a tenant. You could check the newspaper where the foreclosure advertisements are run, but that would only tell you if a foreclosure was moving forward in the next month or so. Particularly in Arizona, there is a real risk with any property that even if things are great for several months, foreclosure may be right around the corner. One thing to do would be to put a clause in the rental agreement that if a foreclosure is instituted, the landlord is liable in some amount. Just be aware that if they are being foreclosed on, they may not be the most collectible individual and the agreement may be worthless.
If you do move and are made aware of a foreclosure, contact the bank immediately. Under the circumstances, they may be willing to let you continue living there until the property is sold.
April 5th, 2010 at 4:34 am
There is no guaranteed way. Research the public records on any potential rental to make sure that no NOD has been issued. That is the first step in foreclosure.
April 6th, 2010 at 7:13 am
Diana -
Work through a property management company. The owners going into foreclosure are less likely to use a professional management company since they will be trying to cut costs. If you ask, and it’s OK to ask, many landlords will tell you where they stand with their mortgage. I have a couple of properties that are paid for, and I actually use it as a selling point when talking to potential tenants! “This house is free and clear – you won’t ever have to worry about being foreclosed on.”
P.S. If you are moving to Tucson, I have a lovely condo there for lease (Yes, it’s paid for).
April 8th, 2010 at 10:02 pm
you can ask owner to provide you proof that they are current on their mortgage loan(s). Ask to run a credit report on owner if they are named on deed.
This will be unique request but given the new circumstances we all face these days this is not unreasonable. Keep asking until you find an owner willing to do this to rent their place.
It does not assure you they will stay current in the future but it is best you can do.
Verify with county that owner is not the bank.
April 11th, 2010 at 4:01 pm
If the home you are renting is going into foreclosure, the bank will indeed have more priority over your contract unless, of course, there is some sort of clause in your agreement which allows you to remain in the property no matter what. This may be a bit out of the ordinary as banks do not want to play “landowner” and may simply want to sell it. The best thing to do if you ever think there may be an existing foreclosure “in the works” is to look into any public notices beforehand. More info can be found online in many areas. Be sure to do your research no matter what. Don’t jump into anything if you feel as though something may not be clear enough for your standards.
April 14th, 2010 at 9:33 am
You can check the public records to see if there is a Notic of Default recorded. That is the first step in foreclosure.
You can also check to see if the property is in foreclosure. There is a FREE trial that is available.
You can also call the utility company and ask them what is the average water bill. They may tell you that the water is shut off. This is an indication that the property is in foreclosure. Why would the seller keep paying a utility bill if it’s going into foreclosure??
Good luck to you!