ifI foreclose, cmrc'l propertyare the existing leases still valid?,Can I cancel them? How can i get lease copi

ifI foreclose, commercial, property are the existing leases still valid?,Can I cancel them? How can i get lease copiies? in a forclosure who is responsible for the tenants security deposits?
In Property Management - Asked by Mel F. - Nov 18, 2010
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Answer(s)

Jorge M. C.
Broker/Agent
Turlock, CA

Hello there,
I just found here in California by a foreclosure assignment that with such action any existing lease (s) are wiped out, not sure what's the story in other states. You might need to check with a real estate attorney.
Very often I deal with this scenario.
Jorge

Nov 19, 2010
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Eric H.
Owner/Investor
Wichita, KS

Depends on state laws... get an atty... but in general a foreclosure action in any court will name the tenants john and jane doe occupants as well in the law suit.. which is what a foreclosure is... generally if they do not appear they like all junior lien holder lose out on rights... even if they do... their recourse is usually to bid at the public auction or trustee sale... the odds of a tenant buying the property at a sale is nill... usually its the main lien holder brnging the action... state laws differ a lot in this... in new york I have a friend that bought a foreclosed building where tenants refused to pay and got assistance from city due to poor living conditions and a bunch of activist attorneys ... he could not evict or do anything... had to improve property or go through condemnation. Here in kansas if I buy a foreclosure house or building I can do whatever I want ... force the tenant to move immediately after auction and redemption period if there is one or renegotiate new lease...

Nov 20, 2010
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Marty H.
Broker/Agent
Lenexa, KS

Be aware that some knowledgeable tenants seek nondistrubance agreements at the time they sign a lease. Typically, these are larger companies with the leverage to convince the landlord to get his lender to sign a document that prevents the tenant from being kicked out in the event of a foreclosure.

Dec 29, 2010
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Glen W.
Lender/Mortgage Broker
Atlanta, GA

If the leases have not been recorded (check with the county) they might not withstand the foreclosure. I would talk with the tenants as well as realtors in the area they might be able to assist and provide guidance.

Feb 2, 2011
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Chris R.
Broker/Agent
Denton, TX

For sure you need competent legal counsel to assist. Foreclosure laws and rules vary. Typically it would render a lease null and void. However, if after the foreclosure you accept rent - you basically end up ratifying the lease. You need to be prepared - legally - to give notice to the tenants once the foreclosure takes place as to what your requirements are. You could renegotiate the lease in some cases or you may wish to accept some leases and not others. How you get copies of leases can be tricky. Who has been operating the property up to now? Someone on ownership / landlord side should have a copy. You may have to make a request (probably best handled by atty) of the tenant to provide you with a copy.
Security deposit - generally (consult atty) a foreclosure will wipe out the obligation of the party foreclosing for the security deposit held. Again this will vary but should be handled by atty giving notice after the foreclosure. In some caes - you may want to work out a deal with a tenant and continue with the deposit as state in the lease for "good will".

Apr 8, 2011
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