Real Estate Law
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This is a difficult situation for you because you are still legally liable to pay the rent to the landlord as long as they are the legal owner of the property. But if a foreclosure occurs, then it would extinguish your lease and the new owner, likely the bank, would be able to terminate your tenancy and evict through the courts if they chose to do so.
You could then sue the landlord for breach of contract for any damages you suffer, but if they are out of state you would have to sue them there. And if they had no money, then you might get a judgment that you can't collect on.
With that said, if you were to simply stop paying the rent, with the owner being out of state, it is very unlikely that they would return to the state to try and evict you for breach of contract. Legally you are required to pay rent....but practically you can probably stop because the landlord is not likely to come back just to evict you from a house that he is losing anyway.
Since its been in our posseion for 4 months can we refuse to give them the refrigerator?
Yes, it is part of the lease. So only if they want to try and terminate the lease and evict you then they would have the right to retake possession of the fridge.
But they would have to give you a 7 day notice to pay rent or vacate before they could try to evict and you could then just pay the rent to continue the tenancy.
So I would tell them that the fridge is included in the lease and you are not in breach of the lease. Further you are fully willing to pay rent to continue it, but you aren't going to surrender the fridge.
As an aside, in addition to being an attorney, I have also been a landlord for over 26 years...