Rocky Vasquez wrote:I'm confused as to what to do here. A property I manage is being foreclosed on. I knew a couple of months back that the landlord was not making payments and told him of his options (I tried to get him to do a short sale). After giving him last months rent I told him that I can no longer handle his property because he was not taking the proper actions in order for him to save his home. I did not feel right putting the tenants in this situation. He quickly told me that he would do the short sale. I spoke with the attorney handling the file and the only way I could get property was to buy at courthouse steps on March 2nd.
Do I notify tenants that the home is being foreclosed on? Do I continue to take rent? Do I let tenants know of their rights (H.R. 1728 Section 220) if the home does go into auction?
Hey Rocky,
I’ve had this come up twice in my business: landlord’s collecting rent while secretly allowing their properties to go into foreclosure. Both families were displaced, one having been there less than two months, lost their first and last month’s rent along with their deposits.
Fortunately since that time, HUD’s enacted new legislation that somewhat protects the tenants in the event of foreclosure. (See HUD, PROTECTING TENANTS AT FORECLOSURE
Now keep in mind that I'm not an attorney. As to the question of you telling the tenants, I’m of the opinion to tell them but, you are certainly not obligated. If you decide to approach them, there are a couple of things to consider. First, they are legally bound to honor their lease. BUT, you do not have to take their rent since you have given your notice to the landlord.
Secondly, you as a REALTOR, are still bound to your fiduciary duty of Confidentiality to the Landlord as to secrets; private matters and so forth so be careful as to what information you reveal. Having said that, property foreclosures in Texas are considered PUBLIC information.
I hope this has been helpful.
Take care,
Jennifer (Jenn) Ryan
REALTOR, GRI
