If your lender has commenced foreclosure proceedings against you, the lender cannot just evict you from your home without some kind of court order or legal notice that your home has been sold at a foreclosure auction. A foreclosure process can take a year or longer so you have time to prepare to move or negotiate a resolution with your lender. Ultimately, you will need to vacate your home once the home has been sold at a foreclosure auction. Because the foreclosure eviction process is different for each state, you should check the foreclosure eviction laws of your state.
Tenant Rights in a Property Going through Foreclosure
Even if your landlord is in default on their mortgage or a foreclosure action has been instituted against your lender, you are legally obligated to pay your rent to the landlord until a judgment has been filed against your landlord or the property has been sold at auction. If you don’t pay your rent, the landlord could evict you by filing an eviction action in court for nonpayment of rent.
As a tenant, you have the following rights and obligations:
- Continue paying the negotiated rent
- Negotiate a reduced rental amount with your landlord
- Negotiate with the landlord to break the lease and move out
- Seek legal help to enforce the landlord’s obligations under the lease if you decide to remain in the property. (Click to see When You Have the Right to Stay in a Foreclosed Property and How to Keep the Lease on a Foreclosed Property)
- File a court action against the landlord for breach of the landlord’s obligations under the lease.
- Per a new law signed into effect in May 2009 by President Obama, you can now stay in the property until your lease terminates and also stay an additional 90 days thereafter before having to vacate the premises if the lender forecloses on your landlord. If there is no lease in effect, then you have 90 days to vacate the property. The law does not specify when the notice to vacate must be given to you. Check your state laws.
Be sure to put everything you and the landlord agree upon in writing. Also, check your state laws to find out what additional rights and obligations you have.(Click here to see Tips For Keeping Your Lease)
Disputes That May Arise Between Tenant and Landlord in Foreclosure
If your landlord doesn’t have the money to make the mortgage payments on the property, then it may be difficult to get the landlord to maintain the property, pay the utilities and make repairs. Another common dispute that may arise between landlords and tenants is the failure of the tenant to pay their rent. The landlord has the right to evict you. It is best to work out a mutually agreeable resolution between you and your landlord to avoid legal costs.
Landlord Obligations during a Foreclosure
If you are renting your property to a tenant, and your home is in foreclosure, you are legally required to fulfill all your obligations as a landlord under the lease between you and your tenant until the court approves the sale of your home and enters a judgment against you. Those obligations include the following:
- Making repairs
- Paying utilities
- Taking care of the lawn, gardening and pool services if negotiated in the lease
- Maintaining the insurance on the property
- Paying property taxes
- Notifying the lender that the property has a tenant
- Notifying your tenant you are in foreclosure
As a landlord, you also have the right to do the following:
- Give notice to the tenant to move if the tenant fails to pay their rent
- Seek legal action for nonpayment of rent and eviction by filing an eviction proceeding with the court against the tenant
- Negotiate with the tenant a reduced rent or other terms
Legal Advice and Help from a Lawyer
The parties should seek legal advice immediately with resolving landlord tenant disputes that cannot be settled between the parties. Mortgage foreclosure eviction laws and tenant landlord laws vary from state to state. A real estate attorney can explain the laws and the parties’ rights and obligations in connection with these matters. Foreclosures and landlord/tenant situations are complex. Therefore, it is recommended that you consult a real estate attorney.
