With the housing market still recovering from the economic stint, many people are thinking twice before they sign mortgage papers and starting to lean towards a rental agreement. But since many of these renters aren’t your typical kid out of college, they might be taking a second look at the quality of the lease agreement for a single family home.
In 2009, the Protecting Tenants at Foreclosure Act was implemented to protect residential tenants from being promptly evicted following foreclosures. This law generally applies to all residential leases. Seeing as how it’s still few and far between to drive down the road without seeing foreclosure signs, this act ensures that all tenants receive a 90-day notice before the eviction.
For the lease to be legit, the tenant cannot be the mortgagor or the parent, spouse, or child of the mortgagor. Additionally, the lease must be the result of a secondary party, and rent must be in the neighborhood of fair market value for the property, except if rent is reduced due to a subsidy (federal, state or local.) An invalid agreement gives the owner the opportunity to waive the 90-day notice; otherwise the terms of the lease will be honored.
It’s not something anyone wants to think about, let alone try and figure out during a grieving period, but settling the estate of a loved one is something the bank will only let you ignore for so long. Given that the average American family has more than one child, specifically 2.5 children, deciding who gets to pay the remainder of the relative’s mortgage is not something that everyone would volunteer for at once. So, by default, who is responsible for paying off the mortgage?
Due to the economic crisis, lenders, creditors, and debt collectors are starting to get more aggressive. In general, when a person dies, that individual’s estate becomes responsible for any debts the individual owed. The individual’s executor or personal representative is responsible for paying those debts, but is not liable for the debts, just responsible for paying the debts out of the property of the estate.
Unlike many debts, a home mortgage is a “secured debt,” which means the lender has a right to foreclose on the real estate if the loan isn’t paid off. If the deceased person had a home mortgage, then the result depends on whether someone else co-signed the note and mortgage. For instance, if a married couple jointly owned a house and both signed a note and mortgage, then the surviving spouse would receive the house, and would be responsible for the mortgage payments.
Navigating the ins and outs of real estate foreclosure isn’t always simple. Purchasing a home at auction can seem like a lucrative and astute method of acquiring property, but what many prospective bidders do not realize when entering a foreclosure auction is that when they purchase a property, they are liable for any and all outstanding liens against that property. It pays to know exactly what you’re getting into before biting off more than you could chew.
Florida Statute §718.116 expressly states that “A unit owner, regardless of how his or her title has been acquired, including by purchase at a foreclosure sale or by deed in lieu of foreclosure, is liable for all assessments which come due while he or she is the unit owner. Additionally, a unit owner is jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title.”
This means that both the previous owner and the new deed holder are jointly and separately responsible for the HOA assessment lien on the property. The good news is that there is a statutory cap on the amount the HOA can collect from the new purchaser (up to 12 months’ worth of assessments or 1% of the original mortgage debt); however, full liability remains with the previous owner and the Association is within their rights to seek out full restitution.
If you are considering buying property at auction in the state of Florida, perform a title search of the particular real estate you’re looking to own prior to bidding in order to determine what kind, if any, liens are held against the property as you will be responsible for all of them, not just the HOA. Taking this extra step will eliminate ugly surprises and leave your feel-good memory of having the winning bid unblemished.
When you’re a tenant, there’s always a chance that your landlord will sell the property you rent. Generally speaking, a regular sale will not have adverse effects on tenants; your lease will not be terminated, but rather acquired by the new owner and in most cases you will be able to continue to occupy the property. In a foreclosure sale however, things play out a bit differently.
If you’ve received a notice of foreclosure against your landlord, it is wise to file an Answer to the foreclosure noting that you have a lease and pay rent. Moreover, include a copy of your lease, explaining its terms and when it expires. If your landlord is unable to halt the foreclosure proceedings, a judgment is then entered against them and the property is eventually sold at foreclosure sale.
The new property owner may request that you vacate the premises but, as of 2009, the Obama administration passed a nationwide law protecting tenants from a sudden eviction as a result of a foreclosure. Under this law, the new owner must either honor the lease or give the tenant at least 90 days notice prior to eviction.
A foreclosure sale can be a confusing and distressing experience for an unwitting renter, but keep in mind that a foreclosure sale is not an automatic eviction; as a tenant you have rights designed to protect your interests. Stephen K. Hachey, a Florida real estate attorney, can help you navigate this process and make the most of a difficult situation. Contact him at 813-549-0096.
At the peak of the housing bubble, real estate scammers were crawling out of their proverbial fleapits in troves, running get-rich-quick house flipping scams or posing as mortgage brokers issuing predatory loans to susceptible borrowers. When the bubble burst, it seemed real estate scammers were at an end, but soon the same charlatans were back at it, capitalizing on the misfortune of millions of desperate homeowners hoping to save their homes from foreclosure. Today, real estate scammers have only become more astute and sophisticated, using elaborate cons to fool impressionable renters and vulnerable homeowners out of their hard earned cash.
Since the market crash, federal and state governments have taken numerous measures to prevent real estate scams. Nevertheless, crooks continue to thrive at the expense of unsuspecting consumers. Taking the following precautions can help you safely navigate the often complicated world of real estate whether you are renting, looking to invest or you are a homeowner facing a tough economic downturn.
Renters should be suspicious of any listings that are not immediately available for viewing or require money up front, have excessive application fees or ask that payments be made to a third party.
Homeowners struggling with their mortgage should proceed with extreme caution when entering any loan counseling or modification program. If the counseling agency is collecting exorbitant fees up front in exchange for modifying your mortgage loan, is not listed by the US Department of HUD (Housing and Urban Development), or persistently promises you will retain your home, this is most likely a scam. Investors should research prospects thoroughly, cross-check listings and verify brokers before making any monetary commitments.
Finally, follow your instincts; deals that seem too good to be true probably are. Never sign anything you haven’t read thoroughly and ask questions if and when you do not fully understand any particular thing. As a consumer, being proactive is your single best defense against con artists; following these simple safety precautions can help you avoid being taken for a ride and ultimately save you thousands of dollars.
Short sales are transactions in which proceeds from the sale amount to less than the balance owed on the property. Though short sales can be a fiscally smart and a radically less agonizing option when facing foreclosure, it is not possible to have a related party purchase your property in a short sale. These transactions are typically used as an alternative to foreclosure in order to alleviate expenses for both homeowners and lenders and more often than not occur after a borrower’s failed attempt to modify their mortgage loan in order to remain in their home.
In short sales, banks require that transactions be executed at “arm’s length;” that is, all parties to the transaction must be independent and on equal footing. For example, a transaction in which your friend or relative offers to purchase your underwater property at fair market value in order to work out a rental or re-sale agreement that would allow you to continue to live in your home would not be considered an arm’s-length deal and result in the lender invalidating the transaction. In a scenario like the latter, the seller stands to benefit greatly, and as the law dictates, sellers cannot profit from a short sale.
Arm’s-length policies have become more stringent since the housing market crash due in part to real estate scam artists taking advantage of the housing market’s economic downturn. Unfortunately for honest, hardworking homeowners suffering financial losses through no fault of their own, these policies can seem heavy-handed and unfair. However, because short sales are high-risk transactions by nature, lenders have implemented these strict policies to protect their assets from mortgage fraud.
In 2010, the Florida legislature passed Statute §720.3085(8) enumerating powers for Florida Homeowner Associations (HOA) to bypass property owners in order to collect delinquent assessments fees directly from their tenants. The statute is designed to hold homeowners accountable for past due fees by disallowing them to collect rent from tenants residing within the community.
How it works
If you are a homeowner with a delinquent HOA account your best bet is to pay the past due fees as soon as you are able. Per Florida law, an HOA is not only able to garnish rent from your tenant in order to collect their fees, but they could file a lien on the property—against both you and your tenant, and even foreclose on it.
First, the HOA will provide your tenant with written notification of your delinquency and demand payment as an ongoing obligation, noting that should the tenant refuse to comply with their demands, they could face eviction from the property. Most tenants do not wish to be ejected from their homes and will work in good faith with the HOA to remain in the property, which in turn makes them immune from any claim you, as the landlord would bring upon them. If the Association is unable to collect the fees, they can then seek damages against you, which could ruin your credit, and result in the loss of your property.
If, for example, you are already in foreclosure proceedings with your mortgage lender, something like this could make an already difficult circumstance even more excruciating. Stephen K. Hachey, a Florida real estate attorney, that can help you navigate this process and make the most of a difficult situation. Contact him at 813-549-0096.
A deficiency judgment is entered against a borrower when proceeds from a short sale, a deed in lieu of foreclosure sale or a foreclosure proceeding on their property are insufficient to pay the entire balance of the original unsecured debt. These judgments are enforced by the courts and how they can affect you varies by state.
Borrowers do not have control over a deficiency judgment as their lender has the legal right to seek full restitution on their debt. Whether or not a foreclosure transaction results in a deficiency judgment is entirely at the lender’s discretion. The amount of a deficiency judgment is generally determined after the original loan principal, interest accrued and attorney fees are deducted from the amount paid by the lender at the time of foreclosure sale.
Though they can opt to cancel the debt and forfeit collecting the deficiency, lenders are more likely to seek repayment from borrowers with greater assets. As a result, people entering foreclosure proceedings often file bankruptcy to avoid having a judgment entered against them or to discharge the debt in its entirety. Therefore, provided that you are an adequate candidate, filing Chapter 7 bankruptcy to avoid a deficiency judgment is completely legal under Florida state law.
When considering bankruptcy in the state of Florida bear in mind that the lender has only a year from the foreclosure sale date to enter a deficiency claim with the courts under the foreclosure proceedings, but up to five years if it files a separate suit to collect the deficiency under the terms outlined in the original promissory note.
In the event that your lender has already foreclosed on the property, a short sale (usually the best way to avoid the pitfalls of foreclosure and the ensuing credit disaster) is no longer a viable option; filing bankruptcy is possibly your best bet against further losses credit or damage.
While the process can be complicated, help is available. Stephen K. Hachey, a Florida real estate attorney, that can help you navigate this process and make the most of a difficult situation. Contact him at 813-549-0096.