Unlucky tenants: First foreclosed on, then scammed
Reader question: When the rent-to-own deal goes belly up
We heard from several readers who had entered into a lease-purchase option, faithfully made their rent and future down-payment contributions, and even upgraded the property, only to have the home go into foreclosure before the actual sale had been completed.
"My husband and I have worked so hard to get our own home, and for this to happen is so devastating," one reader wrote. Another asked, "What options do I have?"
We asked several real-estate brokers and lawyers, who weren't optimistic that tenants could recover their money. (Rent-to-own contracts vary, but typically the tenant pays above-market rent, and the landlord puts the excess toward a future down payment.)
"You're a renter until you purchase," says Kristi Weikel, a lawyer with Weikel & Boyd, in Minnesota's Twin Cities. "This purchaser who thought all these payments were going toward the purchase price really has no remedy."
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Weikel generally advises tenants against rent-to-own agreements "because they don't have any assurance that the landlord isn't going to foreclose," she says.
That said, a tenant could sue the landlord for breach of contract. But there's almost always a massive downside to that option: The tenant would have to hire — and pay — a lawyer. Then, if he wins, he'd face trying to collect from someone who is likely in bankruptcy.
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"You can't get what you can't get," says Merle Schneider, owner of Schneider Real Estate, in Missouri.
His advice: If you really want to rent in a rent-to-own situation, put any earnest money — everything beyond market rent — into escrow so that if the deal falls through, you can get it back.
Questions? Comments? Do you have a question about renting or a suggestion for a future topic in this column? Submit either in the comments section below or on Facebook, or email email@example.com. Brief questions have the best chance of being selected.
what do you do when the property manager has taken all your saveings then asked you to move,to which you comply because youi have no choice rteally. Then toppes it off with a letter demanding another $1,900 for security deposit fixes?
That makes it impossible for you to rent again anywhere You think im jocking i bet? Im not and i have the papers to prove it.
Thats what Trageron Senior citizens manager jill blazek did ,and she was backed by Cowboy Properties when she did it.
She stole $18,000 from me then thinks I cant rean again? Funny I dont have the money to rent.
The banks were bailed out because their subprime mortgages failed. Yet, the banks foreclose anyway.
And where is the FDIC in all of this?
Off topic, but how large is this scam?
That is SCARY! When a murderer like Robert Kennedy (No, Ted killed Mary Jo at Chappaquiddick. Robert and Peter Lawford killed Marilyn) speaks out so condemning of an action, it must be bad!
Kamala Harris is grating the banks RETRO ACTIVE IMMUNITY as part of the deal.
HISTORY OF RETRO ACTIVE IMMUNITY IN THE UNITED STATES
1. Given for illegal merger of banks (we can see the effects of that now)
2. Given to Telecom Company for illegal wire taps. (Fisa bill that led to the patriot act)
3. Given for unconstitutional use of torture
Robert kennedy spoke out against retro active immunity..."QUOTE" The very idea of "retroactive immunity" ... is so radical, so repugnant to the most basic principles of the "rule of law," that only one prior attempt can be found in recent history. The efforts by some in Congress (in 1965) to enact a law retroactively legalizing the mergers by six large banks which clearly -- as a federal court found -- were illegal under our nation's antitrust laws.
The banks knew when they merged that they were almost certainly violating anti-trust laws. But they did it anyway. And when courts began ruling that their behavior was illegal, they ran to Congress to demand that a law be passed granting them amnesty, claiming that the consequences would be ruinous if they were held accountable under the law.
But the very concept of retroactive amnesty, the idea that corporations could break the law and then have Congress pass a special law legalizing their lawbreaking conduct, was so profoundly offensive to Sen. Robert Kennedy (who had been the Attorney General when the banks broke the law with their mergers), as well as then-Attorney General Nicholas Katzenbach, that they engaged in extraordinary efforts to try to put a stop to this Congressional travesty.when the banks broke the law with their mergersRobert Kennedy could not stop them.
Let's not forget that part of the story and the lease super-cedes the foreclosure, under the law, in most states. The tenants can always call the bank and make an arrangement to pay them (the bank) directly, if nothing else.