Foreclosure and Tenant's Rights

Nature of Property Rights Involved: Possessory Right v. Ownership

• Tenants Rights are Subordinate and Inferior to that of Owner

Contract Rights Involved: Mortgage/Note v. Lease Agreement

• Terms of Mortgage Make Leasehold Rights Subordinate to Mortgage

Protecting Tenants at Foreclosure Act of 2009 (Public Law 111-22)

• Codified Under The Helping Families Save Their Homes Act 2009
• Leases Survive a Foreclosure meaning that tenants can’t be evicted
• New Owner Must Comply with Existing Lease
• Unless new owner intends to occupy the home (90 days notice)

Month-to-month tenants (Termination with 90 days notice)

• New Owner of the Property Must Comply with Florida Eviction Procedures

Landlord Disclosures

• If Landlord Failed to Disclose Foreclosure Tenant can Sue the Landlord

Landlord’s Breach of the Lease Agreement and Tenant Rights

• Tenant Can Sue Landlord for Failure to Provide Leasehold Fee of Impediment
• Notice of Material Non-Compliance Can Be Served Upon Landlord

Tenant as Foreclosure Defendant

• Lender has to Name All Parties in Interest/Named Defendants “Unknown Tenants”
• Process Server Confirms Name and Amends Case Style to Add Tenant
• Foreclosure Judgment Includes Tenant’s Name

Leasing of Property While Foreclosure Pending

• Landlord Technically Still Owns Title to Property
• Forbidding Leasing Would Impair Landlord’s Contract Rights
• Will Property be Available for Entire Lease Term

Lender Honoring Lease

• Even Before Tenants at Foreclosure Act Lenders Can Honor Lease
• Tenant Pays Lender Rent, Lender Gets Cash Flow
• Fannie Mae and Freddie Mac have Accepted Rent from Tenants

Tenant Due Diligence

• Inquire of Landlord/Lease’s Representations & Warranties
• Search Online Public Records