Foreclosures
As a property manager do you have a policy in place and in writing that describes how you or anyone who works for you will handle properties, owners and tenants who are involved in a foreclosure?
If you are expecting to see foreclosures to increase in 2009, as are most, now is probably a good time to put some words on paper.
The lease does not have to end just because the tenant or owner has received a notice from the mortgage company. The lease may continue to be in effect. The owner and the tenant may be required to uphold the terms of the lease.
As a property manager you want to continue to receive revenue from the property as long as possible. If the tenant decides they are not going to pay rent because of a foreclosure notice, what are you going to do? If the owner has intentions of saving the property from the foreclosure you may be obligated to collect rents. If the tenant does not pay it would benefit the property manager to serve notice to the tenant just as if the property was not going into foreclosure. If the owner brings the property out of foreclosure and the property manager has not collected rent, the owner may try to hold the property manager accountable for that rent.
If the court gets involved and allows the tenant to break the lease be sure to get copies of the documents. If the tenant is allowed to leave and the owner rescues the property from the foreclosure he may try to go after someone for lost rent.
When a foreclosed property is sold the new owner will receive a writ of possession. If the new owner talks to you about keeping the tenant in place start thinking about a new management agreement and a new lease.
Property managers may want to try to pitch in and help out all parties involved in the foreclosure process. Don’t! And don’t cause the owner, old or new, to loose a tenant. And don’t give anyone legal advice. If the tenant asks you for advice tell them to see an attorney.
It would benefit you as a property manager to consult with your attorney when you receive your first call from a panicking tenant who just found a foreclosure notice on their front door. Tell the tenant to take a deep breath and relax. The foreclosure probably will not happen too quickly if it actually happens. Contact the owner and find out what his intentions are.
So far, in my office, we have been fortunate. Hopefully we will remain so and hopefully you will too, if you have not had the experience yet.
Wednesday, February 11, 2009
Wednesday, December 03, 2008
Check Out The Owner
As a professional property manager you always screen an applicant and do the requisite background, rental history, employment, credit check and so on.
What about that new property you just added to your portfolio? Did you screen the owner? How’s the owner’s position with the mortgage?
Some have estimated more than 300,000 tenants have been evicted from rental homes during 2008 after the properties went through foreclosures. Consumer advocates are urging renters to “check out the landlord’s credit”.
If you attended the November NEFARPM Luncheon you probably carried a Solvency Letter back to the office with you. Use it. Some property managers are even going so far as pulling a credit history and perusing courthouse records. This is a good time to implement a company policy that includes asking the owner if they are current with the mortgage, taxes, insurance and other fees such as H.O.A. fees. Don’t be shy about asking the owner directly. It’s just good business and it could also serve to limit your liability later on in the event of a foreclosure. What ever you do, be diligent and consistent.
If you’d like to read the complete article in the Lakeland Ledger click here:
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