What rights do we have if we broke out lease because our rental was in foreclosure?

UPDATED: Sep 7, 2011

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What rights do we have if we broke out lease because our rental was in foreclosure?

We asked our landlord about the status of his mortgage several times. He only told us that there was lawsuit against it by the bank; he never told us that no mortgage payments were not being made. Then 8 months ago we were told that she would renew lease (for another year). 2 months later she told us that no payments had been made on mortgage. 2 months after that we were told the that modification amount was too high and she was letting the house foreclose. Told us to stop paying rent as a way to get our deposit back. Told us that the other tenant had not paid rent for 3 months. We moved out; we were unable to contact her. Now she’s suing. What rights do we have? Never would have rented if we knew about the true state of the mortgage.

Asked on September 7, 2011 under Real Estate Law, Arizona


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

If you have a written agreement for your former rental, you need to read its terms in that its terms and conditions control the obligations owed you by the landlord and vice versa absent conflicting state law. You agreed to pay a certain amount per month to your landlord for staying at the rented unit.

Whether or not the rented unit was in foreclosure, you still owed an obligation to pay rent for the unit assuming you were getting what you bargained for. If you did not pay rent for what you received (use of a rental for several months), you owed rent to the landlord who owns the property that is in foreclosure. Your and the other tenant's failure to pay the monthly rent may have caused the landlord to fall short on funds necessary to pay the monthly obligation for the property occupied leading to the foreclosure.

Unless the lender that is foreclosing on the property under the recorded mortgage or trust deed advises you to pay the unpaid rent to it, you are obligated to pay the landlord the rental amount agreed upon.

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