Full question:
My wife and I were recently informed by our rental company (landlord) that the owner of the home we rent has not paid the mortgage in about a year and now the house is going to foreclose. We have until 30 days after foreclosure (march 20) to move, but the rental company insists we still must pay full rent even though the home will be foreclosed on. My question is do we have to pay rent for the next two months. We are both full-time students and we have very little income. We also have 4 children and we are unemployed. We have never missed or been late on payment and we have lived here for nearly three years. What are our rights?
- Category: Real Property
- Subcategory: Foreclosure
- Date:
- State: Oregon
Answer:
There is no exemption based on foreclosure in state law for payment of rent due under terms of a lease. While the lease remains in force, its terms regarding payments will govern, and rent due for occupancy will generally be owed. Starting in September 2009, you can apply
any security deposit and/or prepaid rent towards your monthly rent payments once you become aware that your home is in foreclosure. You must notify the landlord in writing that you are going to do this. Once the home is foreclosed upon, you are unlikely to get your security deposit and/or prepaid rent back from the old owner. You should apply this money to your rent as soon as you know that your home is facing foreclosure.
Please see:
http://foreclosurehelp.oregon.gov/DCBS/foreclosurehelp/docs/tenant_foreclosure_rights.pdf
After signing a lease, the landlord is legally bound to deliver the rental for the entire lease term. In legalese, this duty is known as the "covenant of quiet enjoyment." A landlord who defaults on a mortgage, which sets in motion the loss of the lease, violates this covenant, and the tenant can sue for the damages it causes.
Small claims court is a perfect place to bring such a lawsuit. The tenant can sue for moving and apartment-searching costs, application fees, and the difference, if any, between the new rent for a comparable rental and the rent under the old lease. Though the former owner is probably not flush with money, these cases won't demand very much, and the judgment and award will stay on the books for many years. A persistent tenant can probably collect what's owed eventually.
You may also want to talk to the landlord about paying a lower monthly rent amount given the
landlord’s failure to provide you with a secure place to live (called “a breach of the covenant of quiet enjoyment”). If the landlord agrees to accept a lower rent, make sure you get the agreement in
writing and signed by your landlord.
Please see the following OR dtatute:
90.310 Disclosure of legal proceedings; tenant remedies for failure
to disclose; liability of manager.
(1) If at the time of the execution of a rental agreement for a dwelling
unit in premises containing no more than four dwelling units the premises
are subject to any of the following circumstances, the landlord shall
disclose that circumstance to the tenant in writing before the execution
of the rental agreement:
(a) Any outstanding notice of default under a trust deed, mortgage or
contract of sale, or notice of trustee's sale under a trust deed;
(b) Any pending suit to foreclose a mortgage, trust deed or vendor's
lien under a contract of sale;
(c) Any pending declaration of forfeiture or suit for specific
performance of a contract of sale; or
(d) Any pending proceeding to foreclose a tax lien.
(2) If the tenant moves as a result of a circumstance that the landlord
failed to disclose as required by subsection (1) of this section, the
tenant may recover twice the actual damages or twice the monthly rent,
whichever is greater, and all prepaid rent, in addition to any other
remedy that the law may provide.
(3) This section shall not apply to premises managed by a court
appointed receiver.
(4) A manager who has complied with ORS 90.305 shall not be liable for
damages under this section if the manager had no knowledge of the
circumstances that gave rise to a duty of disclosure under subsection (1)
of this section.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
