Property Owners May Be Required To Make Monthly Payments During Foreclosure
Foreclosures do not always happen on people’s primary homes. Sometimes, foreclosures are filed to reclaim rental or commercial properties on which the owner has fallen behind on payments. For a property owner who is facing foreclosure on a rental property, the long wait times for a foreclosure to be finalized may seem like a blessing in an otherwise bad situation because he or she can still collect rent. Unfortunately, Florida law provides a way for the lender to cut the property owner’s occupation of the property short.
A person facing foreclosure on a rental property may sometimes decide to continue renting out the home while the foreclosure is pending in order to stockpile some additional funds to use for legal fees or to use after the foreclosure is finalized. After the foreclosure is finalized the renters are generally asked to leave the property; therefore, it is a good idea for the property owner to inform the renters that the property is going through foreclosure. This kind of notice allows the renters to make an exit plan, and also in some cases can reduce the chances of the renter suing the property owner down the line. While the property owner is in stockpiling mode, the mortgage lender may decide that he or she should make monthly payments despite the foreclosure.
Under Florida law, a property owner who owns a rental or commercial property, not a primary residence, can be compelled to make monthly payments to the mortgage lender while the foreclosure is pending. Using this method, the lender can shorten the amount of time a property owner has to continue collecting rent without making simultaneous payments to the lender. The law holds that unless the property owner can show good cause why he or she should not be making monthly payments to the mortgage lender, the mortgage lender should receive the monthly payments. If the property owner fails to make the monthly payments, without good cause, the mortgage lender is allowed to evict him or her. The court ordering payments may also order another form of enforcement on the order granting the lender payments, if it is appropriate in the case.
The payments made to the mortgage lender during this time do not count as the property owner fixing earlier default on the mortgage that lead to the foreclosure. Therefore, these payments cannot be considered a way for the property owner to get current on the mortgage and avoid or stop the foreclosure proceedings. However, the payments are credited towards the mortgage principal and interest as agreed upon in the original loan; if there is a question of a deficiency judgment after the foreclosure is finalized, these payments can reduce what is owed.
Let Our Attorneys Assist You
If you own a rental or commercial property, and are facing foreclosure either based on being behind on the mortgage, or even homeowners’ association fees, you need to seek legal advice on how to proceed in terms of renting out the property. Contact the North Miami foreclosure attorneys at Charlip Law Group, L.C. for a consultation on your case.