Who Is Responsible For Home Repairs on a Foreclosure Property?

So you get the foreclosure notice that your landlord/owner of the house has defaulted on their mortgage while you have been loyally paying for the rent. The landlord tells you that your rental payments will go directly to the bank or lender if you are lucky. They give you the name of the bank/lending institution, their address, so on and so forth, and so you continue to live in the property and pay your rent as normal and usual.

Next thing you know you forgot to change the a/c filter for the past 4 months and have 4 inch thickness of lint that has clogged up the a/c and now you have a leak that became a puddle somewhere inside the property. The tub or sink is clogged up to the point of no return and now you have to brush your teeth in the kitchen sink or bathe in it, you have a roof leak, your child or spouse accidentally throws an object across the room and broke a window and there happens to be no screen on that window or any of the windows. Who pays for these repairs? Will it be the bank, the owner of the house, or the tenant?

In a normal rental situation, the landlord is liable for making sure that the property is in livable condition, and your roof, plumbing, electrical, and appliances are in working condition. If not, the landlord has the obligation to make repairs within 7 business days of the tenant's written notice. But in a foreclosure, the bank is not responsible for making repairs. Banks are not in the business of managing properties or repairing homes, they are in the business of protecting their assets, and that is to find another buyer to fulfill the mortgage debt and balance.

However, since the owner of the home is still the owner, they are legally liable to make any repairs should they arise while in the process of being in foreclosure. Since the owner of the house was obviously having a hard time paying for the mortgage and therefore in default, large home repairs can be costly and the owner of the house will simply either ignore the request for repairs or tell the tenant to deduct it from the rent or worse.

There are many homes that have been abandoned to the point that once the home has not been met to the rental agreement and repair standards, the home's condition eventually worsens. The owner doesn't care so why should the tenant? The tenant doesn't want to pay for the repair or even bother with it and becomes disillusioned, abandons the property or live their deposit and security or simply lives for free. But why put up with the hassle? Moving on..

In a worst case scenario, the home becomes uninhabitable making the property in worse conditions than before. Although the owner of the house might have had good intentions to make the repairs, they simply could not afford to pay for the repairs, and so the vicious cycle continues.

The property will eventually be tried to be rented or leased out until a buyer comes along but until then, the home continues to deteriorate and become impossible to rent. The property can be rented out for very little money but no one in their right mind will rent a property with a clogged up bathroom sink, or rust on the bare terrazzo floors that once had nice carpet or tile floors, or the mildew refrigerator/freezer that is also present in the closets and walls, even on the carpet, or cobwebs and spiders in all corners.

So before you rent a property, make sure that you understand what the conditions are of the property. Ask if it is a foreclosure property, what the repair conditions are, and most importantly what the lease terms are, especially the deposit and security, which is the attorney handling the property or who is managing the property, and make sure you do a thorough walk-through inspection.

In Florida, it is not illegal to rent a foreclosure property, some of these rentals have a good price and may mean a really good deal for you for the time being, just as long as you are fully aware and well known of the circumstances and facts and that your payments are going directly to the bank/lender/attorney. Not all foreclosure properties will run into these situations but do know your rights before you enter into a rental agreement and/or a lease contract. And not all foreclosure are in such deteriorating conditions but tenant beware before problems may begin to arise that you are fully aware of the possibilities of running into these situations.

Some landlords are willing to compromise if and when the facts are laid out on the table and in black and white, and make the tenant liable to pay an Up-To a certain amount of dollar should an appliance break down, usually around $100, or if the a/c breaks, that's a tough one since it is a major repair and can become expensive, a plumbing job can cost anywhere between $35-$75 just to replace the sink faucet alone, replace a wall with sheet rock, or if there is an electrical problem, and so on. As it is said, Buyer Beware! Tenant Beware!

Resource:

FHA Mortgagees: Please refer to your lender on the Mortgagee Letter 2010-08 HUD FHA Secure.gov for property compliance.