Foreclosure is bad news for a homeowner, but if you're a tenant in a home or apartment building that's facing foreclosure, it can be a nightmare.
Your landlord may not make it clear, but tenants do still have some rights to their living space even if the owner is in the process of losing it. While banks are quick to post eviction notices, there are a few things tenants can do.
Even if you're not dealing with this situation now, if you're a renter it's good information to have. You never know when you might need it.
1. Figure out who holds the mortgage.
As a renter, you don't have a lot of control over a landlord's foreclosure. If the house you live in is foreclosed on then it often becomes the property of the mortgage holder, usually a bank.
Of course, you may find yourself in the lucky situation in which the mortgage holder chooses to keep the building. If that's you, then thank your fairy godmother.
For most tenants, the mortgage holder isn't interested in keeping the property. They sell it as quickly as possible. That means they want you out.
Unfortunately, once the house is foreclosed on, your lease is generally over. Even if it's only just been signed, the foreclosure terminates it.
2. You should receive notice before termination.
As with any other lease termination, the new landlord needs to give you notice.
Previously that meant 30 days, but under the Mortgage Reform and Anti-Predatory Lending Act of 2009, most tenants now have 90 days to find a new place. If you refuse to leave after that, then the landlord can begin eviction proceedings.
3. Some leases provide greater protection.
Some kinds of leases are protected even if the property is foreclosed on. That includes Section 8 tenants, some people with rent control, and residents in certain states with greater tenant protection.
If your building has gone into foreclosure and you're dealing with this mess, an attorney can help you figure out your rights as a tenant.
Landlords are often not interested in sharing the details of tenants' rights, especially if the landlord is a bank that doesn't want to hold the foreclosed property too long. Don't be bullied into moving out before you have to.