Looking for a BP pro to weigh in on my responsibility to the tenants in CT, while the prop. is in a short sale

[Nancy Molinari]

Hello all,

I really need your expertise on this question. I own a duplex and live in 1/2, renting the other side out. I will be moving to Boston for a new job and at 57 years old, crunching the numbers doesn't make sense to rent out both sides - upside down by 30K. I went through bankruptcy because I was laid off over a year ago and couldn't keep up with my 6K income and expenses. I didn't reaffirm the mortgage with the lender during the bankruptcy.

A CT attorney advised me that the best thing to do was to do a short sale, and then I am able to continue to collect rent from the tenants and work with the bank through the attorney and a real estate agent on selling the property. The tenants lease is up 6/30/13, so we are only taking two months here.

I know the laws can vary from state to state, so if you can provide any feedback on this, especially if you are familiar with the CT landlord/tenant laws, I would really appreciate any and all advice. Thanks for your help. Nancy

[Nancy Molinari]

Thank you for your very fast reply! I always paid the mortgage on time both before the bankruptcy as well as after. Because of the job offer, I am just not going to pay the 4/1/14 mortgage payment, which isn't being reported on my credit report anyway, because the mortgage is listed as "discharged" in bankruptcy. The bank said as long as I make my payments timely, I am fine, so I have always made them timely, by depleting my 401k plan.

Your point about whether the bank decides to accept a short sale is well taken. My attorney had mentioned this as well. The bank may want documentation of my income, which is only the rental income at this point. My new job doesn't start until the end of April.

Regarding the deed in lieu, he recommended against this. I have maintained the property and I think it would sell fairly quickly. The rents in the area are higher than what I have been charging, so it is a money-making opportunity for either an investor or someone that wants to do the same as what I did (live in 1/2). It really is a nice duplex - just needs some cosmetic updates.

Regarding the tenants, I have a clause in the lease that either party can decide not to renew when the lease is up, so if the property doesn't sell by June, I can put them on a month-to-month.

Does this provide any additional information for your recommendations?

Nancy