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  1. #1
    Join Date
    Jun 2008
    Posts
    6

    Default Breaking A Lease And Lease Option Amid Possible Foreclosure

    My question involves landlord-tenant law in the State of: California

    Am I obligated to payback the unpaid rent during a foreclosure delay period?
    Was the lease-option contract and lease contract legal?
    Is the broker legally responsible for misrepresentation?

    Background:
    The home was advertised as a lease-option. We agreed, and signed 2 contracts. One for the lease-option and one for the 1 yr lease agreement.
    We paid up front lease option money, and deposit money.

    We learned within a few months of moving in, that the property was behind in mortgage payments. In fact, not one mortgage payment has been made while we are living in the house! We received notice of default in November.
    Just a few months ago we received a notice on the door informing, that the house we currently occupy would be sold at auction March, 2008.
    We stopped paying rent in March, expecting to be foreclosed at any time.

    The trustee sale has since been postponed 4 months. The landlord informed us that he is having trouble getting a loan, but that he is going to buy the home. Why 4 month delay? Because, the landlord, who assumed the rights to the home, received the home as collatoral, and he is trying to buy it as an investment. (so much for the lease-option contract).

    Details:
    The name on the notice of default notice was the former owner (Jane Doe) who lost the home, and the landlord assumed the "rights" to the home.

    We have learned that he has been trying to buy the property for 4 months now (well, maybe trying to postpone buying as the housing market continues to fall), but has had difficulty getting a loan, or taking ownership, or refinancing the loan in his name, as he cannot get the signature from the prior owner. Prior owner is no where to be found. Not getting a signature from prior seems to be the real kicker... Proof that he does not have full ownership of the home.

    Now he is trying to buy the place under his spouse's name. If he is able to proceed with the purchase, does that not in fact break the current contract? Or, if he fails to buy, and the home goes to auction, would that break the contract, right?

    The concern over the breach of contract, is we are trying to recoup some financial losses from the unpaid rent. And we are planning on moving out soon, whether the home is bought or not by the landlord.

    But, is there any issue with who breaks the contract first? Should we wait on an written document of terminating the lease early, until AFTER he either purchases or forecloses the home? Is this critical to whom breaks the contract first?

    Also, if he is not the trustor of the property today, can he legally lease the home to us in the first place? Doesn't this make the contract illegal?

    What about the broker who represented the lease-option? Is he legally responsible for misrepresenting the contract, again, since Jane Doe was still the trustor, the landlord had no rights to sell the property?

    Questions:

    Am I obligated to payback the unpaid rent during a foreclosure delay period?
    Was the lease-option contract and lease contract legal?
    Can the landlord sue me for back rent even if contracts were not legal?
    Is the broker legally responsible for misrepresentation?

    Personally, I just want to move on from all of this...
    Thanks for the help!

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Breaking A Lease And Lease Option Amid Possible Foreclosure

    Take all of your contracts and documentation to a lawyer, pay for a couple hours of lawyer time, and have your lawyer explain your rights. We cannot tell you your rights under contracts we haven't read, and I do suspect it will take a lawyer a couple of hours to work through all of your issues and questions. We have no idea what is going on with the original owner, or about any deal between her and the "landlord".

    If the foreclosure goes through, that will terminate your tenancy and end your obligation to pay rent.

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