Q: I’m a renter and have just learned that my home is being foreclosed. My landlord thinks the bank will evict me, because my lease began after he used the property as collateral for his mortgage (which he’s defaulted on). Is there any way I can stay? I’ve always paid the rent and been a good tenant. –Sam S.

Q: I’m a renter and have just learned that my home is being foreclosed. My landlord thinks the bank will evict me, because my lease began after he used the property as collateral for his mortgage (which he’s defaulted on). Is there any way I can stay? I’ve always paid the rent and been a good tenant. –Sam S.

A: As your landlord explained, when a lease is younger than the loan that’s secured by the property, and the borrower defaults, under the normal rules of the game, the lease is wiped out. Of course, the bank that now owns the property can choose to become a landlord and let tenants stay, but the majority of banks do not want anything to do with property management. They also believe that empty properties are easier to sell, despite the overwhelming evidence that a neighborhood full of empty (and possibly vandalized) foreclosed homes will mean that those homes will drop in value, thus making any sale less profitable.

There may, however, be a way for you to stay, depending on who owns the landlord’s mortgage. In December 2008, Fannie Mae, the large buyer of home mortgages and loans, announced that it would allow rent-paying tenants to remain in foreclosed properties as month-to-month tenants. This is a huge development, and it remains to be seen how these bankers and number crunchers, many of whom don’t know a sublet from an assignment (let alone a pipe wrench from a crescent wrench), will fare as property managers. Let’s hope they do some homework and consider hiring trained property managers to handle this new division of their company.

Q: I was locked out of my apartment one night due to a broken lock. My landlord would not assist me, other than to give me a phone book and suggest I call a locksmith. When I called, my intention was simply to get into my apartment, but it turned out the lock was irreparably broken after many years of use and had to be replaced. The cost was $525, for which the landlord refuses to reimburse me. I’ve heard I can go to small claims court, but that even if I win, there is no guarantee he will pay me. –Jack S.

A: You were certainly within your rights to call the locksmith when your landlord tossed you the phone book, and to expect that the landlord would reimburse you for the cost of the visit. But maybe the landlord is balking at the cost of replacing the lock — was a less expensive part available? And could you have made do without an operable lock until you consulted with the landlord? However inconvenient, it might have been wise to go back to the landlord and inform him of the cost of the proposed replacement. At that point, the owner could have stepped up and made a decision.

But that’s not what happened, and whether you can expect full reimbursement is not certain. First, let’s assume your state has a "repair-and-deduct" statute, which allows tenants to do the repair themselves, then deduct the cost from the next month’s rent, but only after telling the landlord about the problem and giving him a specified (or reasonable) time to do the repair. In your case, the cost of the visit and getting you into your rental would certainly qualify for this remedy, because the repair was necessary for you to live safely in the rental (you can’t use repair-and-deduct for minor repairs), and the landlord essentially told you to go ahead. But you apparently didn’t tell the landlord about the replacement cost, which might make reimbursement for the lock itself unavailable to you. Of course, if you can argue that it would have been unsafe and unreasonable to leave you with an unlocked door for even one night, or that a less expensive lock would not have fit the door, your case becomes more sympathetic.

A thoughtful judge might approach your situation this way: Asking the landlord about the reason for his refusal to reimburse you, the judge will learn whether it’s the cost of the lock that is the sticking point. The judge might think about whether it was necessary for you to have that lock in place that night and whether you could have checked with the landlord before authorizing the repair. Depending on what she learns, the judge might suggest that you split the difference between the $525 lock and one that would have done the job at less expense.

Now, if you decide to stick to your guns, understand that if you use the repair-and-deduct remedy and write your landlord a check for less than the rent, the landlord could respond by sending you a "pay-or-quit" notice. If you don’t pay the full rent or leave, you could find yourself in court, defending yourself against an eviction lawsuit. Though you may have a strong case, if you lose, you lose your rental.

Going to small claims court and suing for reimbursement is by far the smarter method, because if you lose, you lose only the case, not your home. If you win, you’ll get a judgment that you can legally enforce by attaching the landlord’s bank account or garnishing wages. Resist the temptation to offset your next rent payment with the amount of this judgment — as common sense as that solution might be, there’s no legal basis for it.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord’s Legal Guide" and "Every Tenant’s Legal Guide." She can be reached at janet@inman.com.


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