Tenants in Foreclosure- Security Deposit

When I first found out the home I’m renting was in foreclosure my initial thought was to stop paying the rent. I felt that if the landlords were not going to pay the mortgage then why should I pay the rent? I felt betrayed by the homeowners and say now reason why they should financial benefit from the horribly position they put me in.

Well, after several emails and discussion from between me and the landlords it was decided that we would continue to pay the rent because I were contractually obligated to the landlords. The contract they had with the bank was separate. The landlords were fulfilling their end of the agreement and I needed to fulfill mine.

The sale date for the home is the end of August. It just so happens that my lease ends August 15th. The security deposit I put down on the home was equal to the July and half of Augusts rent. Even though I had agreed to fulfill our contract there was still the concern over the landlords paying back my security deposit. The landlords promised time and time again that they had the security deposit set aside, but all signs were pointing to them not.

After doing some research and found this great FAQ sheet on the on the Oregon Department of Consumer and Business Services website http://foreclosurehelp.oregon.gov/DCBS/foreclosurehelp/docs/tenant_foreclosure_rights.pdf
It confirmed that tenants who are in foreclosure can in fact use their last month’s rent or security deposit towards unpaid rents. The form states

“Can I apply by security deposit or last month’s rent towards this month’s rent now that I know my home is in foreclosure?
Yes. Starting in September 2009, you can apply any security deposit and/or prepaid rent towards your monthly rent payments once you become aware that your home is in foreclosure. You must notify the landlord in writing that you are going to do this. Attached to this flyer is sample letter #2 that you can send to your landlord when you pay the amount of your rent minus your security deposit and/or prepaid rent. Once the home is foreclosed upon, you are unlikely to get your security deposit and/or prepaid rent back from the old owner. You should apply this money to your rent as soon as you know that your home is facing foreclosure.”

So I utilized the sample letter supplied to inform the landlords of my intent to use the security deposit towards my July 1-April 15 rent. The response from the landlords is that they were going to evict me for nonpayment. I’ll cover this topic the next post.