What Happens To Renters When a Property is Foreclosed on?
As a renter, it’s uncommon to feel the need to know if the property owner is current with their mortgage payments. This type of information often comes up when the property is being threatened and it’s too late to take any course of action. Federal legislation provides a safeguard so that tenants are no longer left helpless when being faced with the potential to lose their home.
When Your Landlord Is In Default
It is an unfortunate truth that landlords renting out the property are not always in good standing with the original lender. Falling behind on mortgage payments can happen if they cannot keep up with the loan, and at some point the bank will try to force eviction on anyone currently living in the house or apartment.
The Bank is Your new Landlord
Financial institutions are not interested in renting the properties that they obtain through broken agreements. The most likely scenario is that they will immediately try to sell the property before alerting current tenants with an eviction notice. A small settlement may be offered to get the renter out, but a protected or rent-controlled tenant often benefit the most staying under their original agreement. An unlikely decision the bank could make is to hire a new property manager to take over and continue collecting rent. Keep in mind that banks would rather sell than have a non performing asset on their books, so it’s common that they will try to sell without putting a second thought toward the current tenants.
Your Lease Ends With Foreclosure
The majority of rental agreements are signed after the mortgage was established, resulting in it ending when the property is foreclosed. Real estate law comes in handy with this situation because it grants tenants a longer period to find a new place. Do not ever take the chance of being forced to leave once the time period is expired because it’s more difficult to find new housing with a record of eviction, even though it was at the original landlord’s fault.
Understand Your Tenant Rights
As of 2009, the Protecting Tenants at Foreclosure Act was put in place to honor the agreement with a landlord, no matter what status the property is in. Any renter with a month-to-month lease, expired agreement, or living on the property the new owner intends to use is guaranteed a minimum of 90 days to vacate. Otherwise, the new owner must take over the original rental terms as long as they are valid.
Real Estate lawyers at Georgette Miller and Associates, P.C. are here to help you find a solution if you are facing a foreclosure sale or have a past due mortgage. Take advantage of our real estate law knowledge and expertise by reaching the office at 866-964-6529.