Tenant Is Caught in the Middle of a Foreclosure Sale

Question: My landlord is apparently losing the home I rent to a bank foreclosure for not paying a balloon mortgage. The sale is on the 15th of next month and I have several questions:

Should I pay my entire rent for next month or should I pay only half? What will I owe the bank when it takes over on the 15th?

What happens to my security deposit? What happens to the $85 I recently paid to get the tree roots out of the sewer line with the promise of reimbursement from the landlord?

Also, my landlord (who owes $131,000) wants to sell me this place for $115,000. A Realtor tells me the market value is between $100,000 and $115,000. The landlord has been fine over the last three years, but I have three kids I am more concerned about. Should I buy this home?

Property manager Robert Griswold replies:

I would suggest that you contact your landlord and offer to pay the full rent for next month minus the $85 for the tree roots and your security deposit. After the deductions, you may not owe any rent.

I would also advise that you send a letter outlining the rent and deductions (attach your receipts) to your landlord to document your understanding.

The reason you deduct your security deposit and the $85 now is that unless the current owner transfers your security deposit to the new owner, you will be out of luck because the property is being sold for nonpayment (foreclosure). It is my experience (as a court-appointed receiver more than 150 times) that the new owner will not reasonably expect your rent for next mouth if you have already taken care of it with your current landlord (by paying in cash or, in your case possibly, by taking appropriate and earned credits). Of course, you must pay the full rent for the following month to the new owner.

A foreclosure sale essentially eliminates the responsibility of the new owner for your security deposit. While your current landlord remains legally responsible, your chances of getting your security deposit and the $85 voluntarily might also be a problem.

As far as buying the home, there are many factors for you to consider in determining a home purchase--personal needs and finances, location and quality of the home, price, etc. I would suggest you consult with several real estate experts who are actively representing buyers and sellers in the area. You also need to evaluate your own job security and financial situation.

Based on what you indicate, I don’t think you should purchase the home from your landlord unless you pay closer to $100,000 and you have the full agreement of the foreclosing lender. This is called a “short sale” in the industry.

Other strategies could include going to the foreclosure sale yourself and making a bid (assuming you have the cash or can borrow it quietly) and contacting the lender after the foreclosure and making an offer. You already live there, and if your offer is reasonable, it will probably be seriously considered.

Landlord Must Keep Carpets Safe, Clean

Q: I teach an extended studies college course for entry-level apartment managers and read your column with great interest. Recently, I had a situation that concerned me. A tenant had a carpet that was very worn to the point of delaminating (the backing was separating from the fiber or nap). The tenant indicated that this was a health hazard and that the owner was financially responsible for replacing the carpet.

Can you explain how a damaged carpet is a health hazard? I thought carpet was cosmetic and wasn’t a necessity, like heat or water. Would a city health department actually respond to such a complaint and send the owner a violation notice?

Griswold replies:

Yes, I believe that the carpet in this case is a health hazard. A carpet that is so worn that it is delaminating presents a trip-and-fall hazard as the surface of the carpet may move while the backing stays in place. California Civil Code Section 194 1.1 sets forth specific conditions that may constitute uninhabitable dwellings and states this requirement in part as “floors . . . maintained in good repair.”

As you correctly state, carpeting is not a necessity but, once supplied, it must be properly maintained. Therefore, as the landlord you must either replace the carpeting or remove it.

Attorney Steven R. Kellman replies:

As you and Griswold point out, carpeting is not legally required in a rental dwelling. However, if a landlord supplies carpeting, it must be maintained in a safe and habitable condition. For example, a carpet that is excessively worn may have loose threads or tears, which may present a trip-and-fall hazard. In such carpet, there may be exposed nails, which can cause injury and infection to feet. Carpeting may become contaminated with chemicals, mold, mildew or other noxious odors, which can cause health problems.

Poorly maintained carpets pose special risks to small children, who can become severely injured by such conditions. Children have much more physical contact with a carpet than adults, which can make any poor condition a cause for concern.

While initially it may seem that carpet is an amenity not covered by safety codes, it actually is an important part of a dwelling, which can cause severe consequences when its maintenance is neglected.

Tenant Who Vacates Must Honor Lease

Q: I was recently told there was a new state law passed that prohibits a landlord from charging more than 30 days’ rent after I move out, even though my lease does not expire for six more months. Is this true?

Griswold replies:

No. There were no new laws passed concerning termination of a tenant lease. The law remains that a tenant is responsible for the balance of the lease if he or she vacates before its expiration unless the lease contains an early-termination clause or another agreement is made with the landlord.

The landlord must mitigate the potential damages by making an attempt to re-rent the unit. The landlord cannot collect double rent, so the tenant is responsible for the actual rent losses and the reasonable additional costs of advertising the unit.

These amounts can be deducted from the security deposit, which otherwise should be handled in the normal manner.

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This column is written by property manager Robert Griswoldand attorneys Steven R. Kellman, director of the Tenants’ Legal Center, and Ted Smith, principal in a law firm representing landlords. Send questions to Rental Roundtable, Real Estate section, L.A. Times, Times Mirror Square, Los Angeles, CA 90053. Or you may e-mail them at rgriswold.latimes@retodayradio.com.