What Recourse Does A Tenant Have When The Landlord Stops Paying The Mortgage?

Most tenants assume their landlords are maintaining the mortgages on the homes they're renting. Unfortunately, this isn't always true. Some landlords stop paying the house notes and simply pocket the rent their tenants pay up until the month when the banks foreclose on the houses, leaving the tenants to deal with the consequences. If this happened to you, you may be wondering if you can sue for damages. It depends on a variety of factors. Here's what you need to know.

Where Do You Live?

Rent skimming—the act of collecting rent and not paying debt obligations on the home—is only illegal in one state: California. If you are a California resident and the landlord engages in this act, the law provides you with legal recourse to sue the person for fraud and collect compensation for any damages you sustain as a result (e.g., moving expenses).

However, there are a few caveats that affect whether or not you'll actually win in court. The rent skimming must have occurred during the homeowner's first year of ownership. If it happened any time after the first 12 months, then you're stuck in the same boat as everyone else in states where rent skimming isn't addressed. Additionally, the landlord may still escape civil liability if he or she used the money for one or more of the exceptions carved out in the law. For instance, the landlord won't be found guilty of rent skimming if the money was used to pay unexpected medical bills or repairs to the home.

It's a good idea to discuss your situation with an attorney to determine if your case qualifies under the law and to develop a strategy to get your money back if it does.

What Were Your Lease Terms?

Another factor in whether you can sue the landlord for damages related to their failure to pay the mortgage is the terms of your lease, particularly whether you had a long-term or month-to-month lease. The reason this is important is because the lease type determines the type of rights you have under real estate law.

When you have a long-term contract, some states require the new owners of the home (typically the bank in a foreclosure situation) to honor the lease and let you stay until it expires. If you are asked to leave the home before your lease expires or are constructively evicted (e.g., the home becomes uninhabitable and the landlord does nothing), you can sue for the money you spent finding a new place to stay and any other damages you incurred due to the landlord's negligence.

However, your rights are significantly limited with a month-to-month lease. In general, the owner of the home is only required to give you 30 to 60 days' notice that you must vacate the premises and can evict you if you don't leave by the deadline. In this case, you may not be able to recover any damages because the landlord's actions likely would not have put you in a worse position than you already were.

What Were Your Damages?

A third factor to consider is whether the damages you sustained are worth suing for. The landlord can be made to pay your moving expenses as well as the difference in rent for a period of time if your new place costs more than your old one did. If the person's actions were particularly egregious (e.g., they hid foreclosure notices and you were put out the same day by the sheriff's office), then the court may award punitive damages.

Unfortunately, the amount of money you are eligible to receive may not justify a lawsuit; at least not in regular civil court. If you're only out a few thousand dollars, then you may be better served suing in small claims court for reimbursement.

As noted previously, it's a good idea to talk to a personal injury lawyer about the issue. He or she can advise you on the best course of action to take, which may help you save money and get the justice you deserve.

About Me

What Everyone Should Know Before Hiring An Accident Attorney

My name is Diane, and when I was hurt in an automobile accident, I was hesitant to contact an attorney because I thought it would be too expensive. Before completely ruling out getting an attorney, I decided to research accident and personal injury attorneys to find out exactly what they do and what I could expect if I decided to have one represent me in my case. I was very impressed by what I found out, and I also discovered that the payment arrangement for many accident attorneys are based on a contingency fee. With this knowledge, I was able to hire an attorney, and I didn't have to worry about the expense. If you've had any type of accident or injury that was caused by another person, you should read the information in my blog. I've made this information available so that others will know what to do.