How best to handle rental property that I can no longer afford the expenses on?

UPDATED: Sep 30, 2022

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How best to handle rental property that I can no longer afford the expenses on?

I have a rental property that is currently being rented. The rent does not pay the

entire mortgage and I am over my head. The house is in need of some major work but I have no money. It’s value is much lower than what I owe. I already got my payments lowered but it’s still not possible to handle.

Asked on September 8, 2016 under Real Estate Law, Massachusetts


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

There are no good options: if you walk away from the mortgage and let it go into foreclosure, the lender can still sue you for the balance left unpaid after selling the house and applying the proceeds against your loan. Since the house is underwater, and they typically go for even less than they normally would in a foreclosure sale, you could be looking at a considerable shortfall which you could be sued for. You could try to short sell the property--the lender may agree to take the short sale proceeds as payment in full of your obligations, but they are not obligated to do so; they could still hold you accountable for the remaining balance. If the property is not worth the mortgage, there is almost no way to get out of owing money; you may have  to short sell or let it go into foreclosure, then file for bankruptcy.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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