What happens when a landlord facing foreclosure still collects rent from the tenant?

A friend of my recently asked me this question.

Can a landlord facing foreclosure still collect rent from the tenant?

Yes, a landlord who has not paid the mortgage may continue to collect rent from the tenant. Many mortgage lenders have an Assignment of Rents clause in the note, whereby the mortgage company has the right to receive the rent when the loan is in default. In actual practice, we have not seen the Assignment of Rents clause exercised on residential properties. The lease will lay out the duties and expectations of the landlord and the tenant. If the landlord fulfills their duties, such as keeping the property maintained, the tenant has to pay rent. If the landlord breaches the lease, the tenant can take the landlord to court to resolve the problem or obtain some relief for the breach. We’ve seen several cases where the tenant stopped paying the rent when they realized the landlord was not paying the mortgage. The landlord took the tenant to court for non-payment of rent. We’ve seen the judge rule that the tenant must be evicted since they failed to pay the rent. However, the judge also ruled that the landlord would not receive a judgment against the tenant for the unpaid rent.

Source : Significa