Applicant wants a "foreclosure clause" in lease

[Bienes Raices]

They're concerned (understandly) about renting from someone who could go into foreclosure in the future, leaving them high and dry.

I tried to reasurre them that I just bought the property this year, and most of the people going into default bought at the top of the market a few years ago, but they're still nervous.

They want some kind of clause in the lease, but I'm not sure what to put. I was thinking of putting a clause offering a one time payment to them of $500 for moving expenses if I default and they have to leave (which is never going to happen). Are there any pitfalls to this? Thanks.

[Marcus LaGrone]

I recommend that all tenants put a foreclosure clause in their lease agreement, but there is never any monetary recourse. I feel they have the right to ask these questions and it shows they are fully engaged in the process. Fully engaged prospects always make for better tenants.

This is a clause similar to ours: Tenant has the right to request proof that any mortgage(s) held on the above referenced property is no more than 60 days delinquent. Proof may be requested in writing, once every 4 months for a fee of $15.00, with the first request of each lease term being free to the tenant. In the event that the mortgage is found to be more than 60 days delinquent, the tenant may terminate this agreement with a 30 day written notice. No early termination fee will be assessed. All other provision of this agreement remain.

I don’t have our agreements in front of me, but this is pretty much what it says.