Can attorneys representing the bank in a foreclosure tell a tenant not to pay rent and that they can stay?
Question:
Answer:
Sounds like a clear conflict of interest .
Once the BK is filed, the rental properties no longer belong to the landlord but are assets of the bankruptcy court and are administered by the bankruptcy trustee.
What that means is the landlord cannot collect the rents (or any that are sent must be remitted to the trustee) and is not reponsible for any repairs/upkeep (after all no rents, no money to pay for repairs)
BTW his BK attorney should have already told him all this
I will also say it is quite STUPID of the attorney for a creditor to tell a tenant to not pay rent as that reduces whatever assets are available to the trustee to distribute to the creditors and I am sure the bank that loaned the money to buy the properties is a secured creditor, they are at the front of the line for any distributions.
If I understand your question, are you the "tenant" allowed to stay in the property until the sheriff's sale is complete. Yes. The bank will put a notice to vacate on the front door. The landlord can do nothing about you as the tenant as long as you pay rent. But if you default on the rent, the landlord may be able to file a judgment lien against you personally. It cost money and if they aren't making the mortgage, chances are they don't have money to file a lien either.
They attorney can tell a tenant that... but it doesn't mean that it's accurate. The tenants have an obligation to pay the lease to the landlord, regardless of whether the house is in foreclosure or not. Until the ownership of the property transfers, the landlord is able to collect rent payment and sue the tenants if they are in default on the lease.
The landlord can file bankruptcy to stop the foreclosure, of course, but it would be best to consult with an attorney. The filing of bankruptcy shouldn't affect the ability to collect rent payments, as the tenants aren't in bankruptcy -- they still have their lease agreement that needs to be paid every month. If they break the agreement, the landlord can seize the deposit or forcefully evict them.
In terms of a maintenance company, that would have to be determined through the bankruptcy court. They may want to keep the process as simple as possible, or the landlord may be able to use the company, as long as the bankruptcy payments are made on time. The court will probably not care where the payments are coming from, as long as they are made on time, but they will not want to involve the maintenance company in the process itself.
Hope that answers some of your questions.
ForeclosureFish
http://www.foreclosurefish.com/...
Attorneys can say anything but there is an ethical violation here and you may be able to file a complaint with the bar (to see if they broke any statutes). Before you do anything though, make sure you have proof. If you want to know more about the foreclosure process and how it works, I suggest this book: Complete Guide to Real Estate Tax Liens and Foreclosure Deeds: Learn in 7 Days
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