Is it Illegal to Collect rent on a property that is in foreclosure?

I am a landlord for a trailer park. The property is in foreclosure. The property is owned by a development company. There is attorney calling me and telling me I cannot collect rent b/c of the foreclosure or they will take me to jail. Yet my boss tells me to keep collecting… What should I do? Is the attorney trying to bully me into giving the bank money behind my bosses back? Or am I really in danger of going to jail?

Fyi this is in the state of Florida

Posted in Landlord Tenant Law.

8 Comments

  1. let me ask a clarifying question — are you an employee of the development company [the property’s owners]?

    if you are — ask their attorneys for guidance.
    if you are an independent contractor — ask your own attorney for guidance.

    you do what the attorney says is proper and legal.

    and then point the lawyer who keeps calling you to the attorney.

  2. Until the foreclosure is complete, the boss still owns the property and is entitled to the rents as defined by the leases.

    You are an agent for the boss and not the owner, so by following his instructions to continue to collect the rent you are not in any trouble. You can not take direction from any bully attorney that tries to scare you into not following the boss’ instructions. Tell the attorney to call your boss as that is who you take your orders from, and for him to quit calling you from this point forward or you will file a complaint with the state bar association.

    Also, it doesn’t appear you are the landlord, but rather the property manager. Be sure to make that distinction.

  3. Can the bank come up with an assignment of rents or a rent execution order? If they can, then you will have to hand over the money to them.

    As a landlord, don’t you have an attorney you could speak with?

    P.S. There is a document called an assignment that allows a lender to collect rents from the tenants of a borrower in default. There doesn’t need to be an actual foreclosure, just a default, for this to kick in. This document assigns the tenants leases and rents to the lender without exception if the borrow defaults. Most investment property loans have this. If the lender for some reason doesn’t have this, then the landlord gets the money up until an actual foreclosure … unless there is a court order that says otherwise.

  4. NO! Just because the foreclosure process has started does not mean that they no longer own it. This process takes months to complete. You have every legal right to collect rent until the day the bank takes possession. It is illegal to collect rent past the day they no longer own it.

    They are bluffing and trying to scare you on the behalf of someone that does not want to pay.

  5. The others are correct, until the lender owns the property, you are correct to collect rents for your boss. The renters are obligated to pay the rent until the current owners have gone through the foreclosure process and the bank now owns the park.

    You aren’t going to jail today, sorry. =)

  6. You collect rent on behalf of the owners up until the date the bank actually owns the property.

    You can not be arrested, this “attorney” is a scum bag just trying to bully you. If he is demanding rent monies go elsewhere he is connning you, and most likely is not even an attorney.

    Again, you can not be arrested for collecting rent. Even if you make a mistake.

  7. You might want to check your state laws for any prohibitions against collecting rent on trailer homes or manufactured homes.

    But in general, just because a property is in foreclosure does not mean that you can not keep collecting. If the property was in foreclosure and you were owed on a personal debt by the company, would the lawyer be able to tell you not to collect on your contract just because the company had defaulted on another contract?

    If a homeowner falls into foreclosure on a house, can their credit card companies keep trying to collect payments? Of course they can!

    Now, if the company has filed for bankruptcy, the automatic stay will be in effect, and then all collection efforts have to cease while the debt is involved in bankruptcy.

    Also, there may be other statutes affecting the property and trailer depending on how it is classified under state laws. There may be small differences in how the collection and foreclosure processes affect each other in cases of manufactured homes and land contracts.

    But threatening you with jail? That’s ludicrous. No one can put you in jail except for criminal offenses or contempt of court, first of all. So the lawyer is just banking on your ignorance of the law to get you to stop doing your job.

    Hope that helps.
    ForeclosureFish

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