Please help friend with a house issue

[Aristomommy]

I am posting a real estate question here in hopes that someone could point my friend in the right direction. She is a single mom and has limited time to research the issue.

She moved into a home a year ago and signed a land contract (or lease purchase, maybe these are the same thing?). Once her other home sold, she obtained a mortgage, but the house is not worth what it was at the time of the contract. She has tried to negotiate the price down but the owner asked her to wait another 6 months until the contract expires.

Now the owner told her he has stopped making his mortgage payments and she is instructed to mail the lease checks to a po box instead of depositing them to the bank account the mortgage is with. She feels this is wrong, since the lease payments more than cover his house expenses, but he is forcing the house into foreclosure. She is worried about not only giving him money he has no intentions of using toward the house, but only losing her security deposit and ultimately having to move.

Has anyone encountered this type of situation? Is a real estate attorney the place to visit or can a person negotiate a purchase with a bank, if the home forecloses? I have read that even if someone else purchased the home, she can at least stay until the end of her lease.

 

[roliepolieoliefan]

We met military people stationed here on Halloween a couple years ago. They are here for 3years and renting the house a few streets over.

They have been paying rent but found out the owner is not using it for the payments but doing who knows what and now the house is going into foreclosure. The man who owns the house lives in FL and is unable or refuses to be able to be reached.

They contacted a lawyer. He said to stop paying him. They did. Its been about 1 1/2 years now and they are still there.

Its a shame. I know the situation is different for your friend. But why would she continue to pay if the place will eventually go into foreclosure. She needs to contact someone fast and get some correct advice.

 

[dfchelbay]

I'd withhold whatever security deposit your friend has made. Then, tell the homeowner you will pay a reasonable amount of rent to him per month. This will buy her time to find another home and outright purchase it with a mortgage. Your friend needs to forget about this guy and this house. This home isn't worth what it was when she made the deal, he won't negotiate the price down, and worst of all, he is keeping her money and allowing the home to go into foreclosure. Don't wait and be surprised by the sheriff's department showing up at her house and throwing all her personal belongings out on the lawn for her to remove from the premises.

She needs to just move on from this house. It's a buyers market and she can find an even better house for less money right now anyway.

 

[Blue.Fairy2]

We met military people stationed here on Halloween a couple years ago. They are here for 3years and renting the house a few streets over.

They have been paying rent but found out the owner is not using it for the payments but doing who knows what and now the house is going into foreclosure. The man who owns the house lives in FL and is unable or refuses to be able to be reached.

They contacted a lawyer. He said to stop paying him. They did. Its been about 1 1/2 years now and they are still there.

Its a shame. I know the situation is different for your friend. But why would she continue to pay if the place will eventually go into foreclosure. She needs to contact someone fast and get some correct advice.

I agree. I can not see paying the rent when at any moment you may have to pick up and move, because the landlord is a deadbeat. I do not understand why he will not renegotiate the price of the house with your friend. Also if she is still under contract with the landlord she needs some serious advice about her legal ramifications.

 

[Aristomommy]

I agree with all of you, that continuing to pay lease to someone who is very upfront about not applying it to the mortgage is a bad idea. She is concerned though about doing the right thing even when the other person is not. I feel so bad for her and would like to do whatever I can to help, because I have a feeling she is taken advantage of.

I think the reason the owner will not renegotiate the price is that he took additional loans against the house, more than what the house is currently worth. He might just want to walk away instead of selling the house at a loss at this point. Is there a way to find out what he owes when negotiating a short sale with the bank?

 

[Blue.Fairy2]

I agree with all of you, that continuing to pay lease to someone who is very upfront about not applying it to the mortgage is a bad idea. She is concerned though about doing the right thing even when the other person is not. I feel so bad for her and would like to do whatever I can to help, because I have a feeling she is taken advantage of.

I think the reason the owner will not renegotiate the price is that he took additional loans against the house, more than what the house is currently worth. He might just want to walk away instead of selling the house at a loss at this point. Is there a way to find out what he owes when negotiating a short sale with the bank?

Ah good point. Then he would be in breach of their contract and she does need to seek legal advice. I say take the rent money and find an attorney.

 

[marlynnp]

She should contact an attorney. But I would immediately set up a separate bank account and start escrowing the rent rather than paying it to the landlord. Deposits should be made into the account for the same amount and same due dates as the lease stipulates.

 

[PinkRhombus]

As a tenant with a contract, she cannot just up and decide what she thinks is reasonable. She has to pay what her contract states.

Depending on where your friend lives, I think I remember hearing something about some law or guidelines being set up in regards to people getting kicked out of houses they were renting when the owner failed to make the mortgage payments.

I'm not saying that it enables the renter to stay indefinitely, but it helps when the sheriff shows up trying to move your belongings out.