Rights of Renters in Foreclosed Homes

Authored by , LegalMatch Legal Writer

Locate a Local Real Estate Lawyer

Most Common Real Estate Issues

Rights of Renters in Foreclosed Homes

If a landlord defaults on his or her mortgage and the property is foreclosed upon, the consequences for the property's renter can be dire.

What Happens To Tenants If The Landlord Is In Foreclosure?

When a landlord or property owner defaults on the mortgage, the bank or lender becomes the owner of the property and usually seeks to sell it as quickly as possible at a foreclosure sale.
Under the law of most states, if the mortgage was recorded before the lease agreement was signed, foreclosure terminates the lease, and the new owner can evict the tenants with little warning.

Should New Owners Evict Tenants After a Foreclosure?

Many mortgage holders are inclined to evict tenants after a property has been foreclosed on, believing that an empty property is easier to sell than a property with a tenant inside. However, in a slow rental market, it might be more prudent to have a tenant living on the property and paying rent rather than having a property sit empty.

Are There Any Protections for Tenants?

The “Protecting Tenants at Foreclosure Act of 2009” (PTFA) adds federal protection by requiring at least a 90 day notice before new owners can evict tenants if the tenants held the lease prior to the new landlord acquiring title of the property. The PTFA only protects residential tenants.

What Can Tenants Do To Prevent Eviction After A Property Is Foreclosed On?

Some tenants are eligible to receive protection under federal or state laws:

Additionally, tenants in states that do not afford such protections can sue their former landlords. Landlords have a legal obligation to protect tenants’ right to the “use and quiet enjoyment” of the property. A tenant can sue for the costs associated with finding a new place to live, and the difference in rent between the old and new apartments. However, if a landlord/owner is in foreclosure, he or she may not have the assets to fulfill any judgment the tenant wins.

Do I Need a Lawyer?

A real estate attorney can help you discover who exactly owns the property and establish your rights against any eviction proceedings. An eviction caused by the landlord’s own mortgage problems can be disastrous, not only because you can lose your home, but also because you can lose future prospects of renting in the future if an eviction shows up on your credit report. A lawyer can help you avoid these stressful outcomes.

Consult a Lawyer - Present Your Case Now!
Last Modified: 01-13-2014 11:53 AM PST

Find the Right Lawyer Now

Did you find this article informative?

Link to this page

Law Library Disclaimer

Rights of Renters in Foreclosed Homes, law,lawyer,lawyers,legal,tenant,foreclosure,property,landlord,tenants,rent,mortgage