Should I keep paying my rent? My Landlord is in foreclosure

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If you spend any amount of time perusing real estate question and answer forums, you will find an inordinate number of questions framed something like this:

My rental is being foreclosed on, should I keep paying my rent?

Or the slightly more hostile version:

If my landlord isn’t making his mortgage payments, why should I send him my rent check?

Let’s start by looking at what a lease is. You all know it’s that document you and your landlord sign before you take possession of a rental property. But it’s not just a form that explains how much rent, security deposit, and whatnot that you have to pay.

Here is the general definition of a lease:

A lease is a contract by which one party conveys land, property, services, etc., to another for a specified time, usually in return for a periodic payment. (My emphasis)

Yup, note that bolded and italicized word above — contract. What is a contract?

A written or spoken agreement, esp. one concerning employment, sales, or tenancy, that is intended to be enforceable by law. (My emphasis again)

So your typical lease is a contract, enforceable by law, that you enter into with your landlord.

Of course I haven’t seen YOUR lease, but I’m quite confident that it does not include language like, “If your landlord stops making his mortgage payment you no longer have to pay rent.” Nor does it likely say, “Your landlord will use your rent payment to make his mortgage payment.”

That’s an argument I see frequently — My landlord is not making his payments. He should be using my rent to pay his mortgage, shouldn’t he?

Well, no, not necessarily. Your landlord isn’t under any sort of obligation to redirect your rent payment to his mortgage company. He or she is free to do whatever they want to with the rent you pay them. If they want to take your rent payment and blow it on the craps table in Vegas, that’s their┬áprerogative. Ditto if they want to take your rent and bury in the back yard, give it to their mistress, buy cocaine with it, whatever. You pay them rent based on the contractual terms of your lease. They pay their mortgage based on the contractual terms of their mortgage. The two contracts aren’t connected in any way.

And that is exactly why you should keep paying your rent under the terms of your lease agreement, regardless of your landlord’s position with their mortgage lender. I’ve seen real estate agents tell renters, “If your landlord has put your home up for a short sale, you should make arrangements to pay the bank directly.”

WTF?? First, if you are renting, it is not “your home”. It is your landlord’s home. Second, just because the landlord put THEIR home up for sale doesn’t mean you stop paying your rent, or pay someone else the rent. That’s ridiculous. Your lease contract is between you and your landlord. Pay the rent based on the terms of your lease. It will very clearly tell you how much to pay, when to pay it, and who to pay it to.

If some real estate agent tells you to stop paying rent, or your neighbor’s cousin’s friend says they stopped making rent payments and nothing happened, you might want to get them to sign a contract saying they’ll reimburse your expenses when you get evicted, or at least let you and the kids move into their spare bedroom when you find yourself without a roof over your head.

If you really think you have some sort of case for not paying your rent, grab a copy of your lease and find a good attorney to review your options. That lease is legally binding contract, if you plan on breaking it, you should do so under the directions of an attorney, not a real estate agent, or cousin Betty’s friend, and you certainly shouldn’t rely on advice from complete strangers typing on an internet message board…

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About the Author
Jay Thompson

I'm a real estate broker in Phoenix, Arizona and the publisher of the Phoenix Real Estate Guy blog. I tend to drive too fast and scream at the University of Texas and Denver Broncos football teams. My two kids are smarter than most adults I know and my wife is simply amazing.

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