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Tenants Suffer When Landlords Are Foreclosed
With foreclosure rates at all time highs all over the United States, tenants who rent from troubled landlords are also suffering. In many cases, renters are suddenly surprised to find that their landlord is no longer the owner and that even a long lease doesn’t save them from eviction unless they leave willingly. Perhaps equally distressing, renters are discovering that getting back their security deposit from financially strapped former landlords can be difficult if not impossible.
In most cases, renters of houses, duplexes and condos must vacate a property after it has become foreclosed home and either a new individual owner or a bank has taken possession. Renters rarely hear about a pending foreclosure of their rented residence until being told that they have thirty to sixty days to vacate by a representative of a financial institution. That’s due to the fact that landlords are not legally obligated to inform their tenants about an impending foreclosure.
Tenants on a month-to-month basis have no right to continue renting their property from a new owner unless he wishes o re-negotiate a new lease. Those who do have a lease are usually entitled to thirty days notice unless they have been in residence more than a year in which case it will be sixty days. The single exception is someone renting in a rent-controlled building in areas with ‘just eviction’ laws that don’t include foreclosure as a reason for eviction. One additional exception is when a renter signed the lease prior to the owner taking out the mortgage.
In most states, landlords have three weeks to return a tenant’s security deposit after they move out. In cases of foreclosed properties, landlords frequently default on this too and filing a civil lawsuit is their only hope. The idea of withholding the last month or two’s rent from the owner also usually fails, since the tenant ends up with an eviction on his credit report making it difficult if not impossible to secure a new rental.
Even when a renter does become aware of the eviction proceeding upon the owner’s receipt of a Notice of Default, he only has approximately four months until he must vacate the residence. On occasion, tenants with this ‘heads up’ about the pending foreclosure have attempted to contact the lender to ask to remain a tenant. Unfortunately, banks and financial institutions are not interested in being landlords and this request was not granted. Instead, they asked that the tenant vacate as quickly as possible once the foreclosure was completed by a sale.
In some cases, banks and financial organizations will offer the tenant a cash reward (normally $1,000 or more) to move out within two weeks and leave the property clean and ready for new occupancy. This is called a ‘cash-for-keys’ transaction and most renters are completely unaware of the possibility and don’t bother to explore it.
Of course, it is always possible for a tenant to stop paying rent and gamble that the landlord will not go to court and start an eviction proceeding. Under the law, the landlord must give 3-days notice to the tenant before filing such a proceeding. Once the eviction takes place, it appears on the tenant’s credit record as a very-black entry.
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Is there a reliable number of how many tenants are facing eviction because of foreclosure? Nationwide, or in different states? I’m interested in Ohio, especially.
Of all the homes I could have picked to rent…I picked one that was going into foreclosure. What makes it even more unfortunate is the fact that I was going to be on a lease-to-own program after a year. I’m a hard working, single mom with a teenage daughter. I just finished school in September and looked so forward to finally having a real “home” and not some apartment. The process server just served me notice of foreclosure on Saturday. I’m heartbroken and can’t believe this is happening.
A question relating to new eviction law in CA…
Can you tell me ehat is the time period before the bank can begin eviction process of tenants on a foreclosed property? and if it is an owner occupied home, does the same apply?
I just got served papers today that the people that own the house I am renting is in pre foreclosure, but I rent from a realty agency. So how do I try and buy this house while it is in pre foreclosure? I have lived here two years and would rather buy this house than move and pay higher rent somewhere else. Help anyone!!!
is there any government assistance to help landlords facing foreclosure? thanks!
The owner of my apartment told me at the end of September, 2008 that I have to move because she sold the property. I was told to keep the rent and move out within two weeks. My unlce looked into this and found out the property was in forclosure and bank owned since July, 2008. We were not informed of this and they were still collecting the rent. I have not received a letter from the owner or the bank that owns the property. What should I do?
I’m a landlord and am trying to avoid foreclosure but I’m having trouble finding anyone to help. Is there a national number I can call to get started??
Iam waiting for the cash for keys incentive for about 2weeks iam ready to go but I have not recived a check
I am a homeowner in florida. I am currently on foreclosure and I have a tenant in my house. I know that I am in foreclosure but the bank has not yet taken the key from me yet. Is it legal for State of Florida to still collect rent from my tenant while I am waiting for the lender to surrender the key.Somebody please help me with this legal issue.
I’m a single mother of two have renewed my lease with an out of state owner….. just received a notice from a law firm that the property is going to be sold on the court house steps….. No one will tell me what is going to happen to me?? I have called the law firm conducting the sell, I have called the court house and no one will give me information on what I am to do….
I want to know that they are not going to come and put a lock on my door. I need some info on my time line to
move etc….. Can you help??
I am a renter in florida, I was recently served with foreclosure paperwork. I also have a lease with a management company. I feel uneasy about livng here now knowing I could be evicted at any time. Do I continue pay rent and stay here or am i free to leave and break my lease? can someone please help? I’m also worried about the management company trying to hurt my credit score for leaving?
[...] brings down the value of their home. The bank becomes the owner of the property once it has been foreclosed and they have neither the time nor the inclination to maintain the houses properly as they become [...]
I am Also a renter in florida with the same issue as geoff. in a rental property through a management company should i pay or should i go?
I have been renting a home from a management company here in Florida. The owners live up north somewhere. I received a notice of an impending foreclosure. The management company never said anything, I do not even know if they know yet, not sure. What are my rights? I am a single mother of two young children. I need time to come up with the money to move? Someone from the courts is coming by today to give me information they say and instructed me to write a letter to the attorneys asking them to keep me “informed”. This has totally caught me off guard and I am not prepared financially to move as it will cost a few thousand to do so. I am beside myself. Can you give me any advice? I am a little upset, as I know that you have to be really behind for a home to go into foreclosure. Does this mean the owner’s were not using the rent money I was giving them to pay the mortgage? It hardly seems fair to suffer for something I didn’t do.
The only thing you can do now is not pay the rent and save it on special account just in case the owner recuperates the property and demands the rent. If the house goes to foreclosure and them you can use the rent money to rent another home.
Matthew Griffin
ForeclosureDataOnline.com
I heard there is a new law stating that if you are renting and the property goes into foreclosure that you are allowed to stay for the remainder of the lease. Does anybody know if this is true? I think the house I am renting is going into foreclosure.
Yes, that is true. A new law in place as of May 2009. If you’re already in a lease you’re able to complete the lease in most cases. If you’re month to month, you could have approximately 60 to 90 days.
[...] Tenants suffer when landlords are in foreclosure [...]