The landlord didn't say a word but the notice tacked on the front door said it all. The mortgage wasn't being paid and the bank was giving notice of the pending foreclosure action.
It isn't a new a new phenomena, in fact I first wrote about this back in October 2007 when one of my clients experienced the shock of a foreclosure move. Fast forward and the notices are still arriving on door throughout Northern Virginia. Along the way I've learned a few things to try and help my rental clients avoid this mid-lease move or protect their credit rating when the notice does arrive.
Ask to see a copy of the last three mortgage statements from the prospective landlord to show that they are current on their payments. It doesn't mean that they are going to keep paying but at least you know they are paying now. If they aren't willing to share this information with you, be a bit suspicious as to why not. Check the MLS to see if the property is also listed for sale. On more than one occasion I've discovered a rental property listed for sale as a short sale. That's a big red flag.
If the tenants see the foreclosure notice, have them "hold" the rent and deposit it with an attorney. Don't stop paying rent because your landlord is going to foreclosure. There could be an implication on your credit, however advise the landlord that the rent will be held by an attorney until they can provide documentation that they are current on their mortgage payments.
If the property is being professionally managed contact the management company to let them know of the impending foreclosure. They often don't know until a tenant calls them that the landlord is in financial trouble.
Though these steps may not help everyone I have found that they have made me look closely at rentals before I suggest a tenant sign a lease. It has saved at least two of my clients thousands of dollars on "lost" rent when they discovered the landlord was headed to foreclosure.
Remember that the chances are slim that a tenant will get back their security deposit on a foreclosed property. Having the rent held by an attorney means that even if they end up having to turn some of it over to the landlord they may be able to hold on to an amount equal to their security deposit to use towards their next property.
Real People*Real Lives*Real Estate
Military Relocation Specialist serving military families relocating to and from the Pentagon, Fort Belvoir, Quantico MCB and all of the Military District of Washington installations.
Licensed in the Commonwealth of Virginia