What Renters Need To Know About Foreclosure

by Emely Peight on January 8, 2012

If you are renting a home and it is about to be foreclosed on, you might think that because you have a lease you will be protected from eviction. However, this is very likely not the case. Your rental home can be foreclosed on and you can be evicted. So, is there anything you can do?

In most states, the law does not protect renters whose homes are foreclosed on during the term of their lease. As long as the lease was signed after the mortgage was entered into, a lender who forecloses on the landlord can sell the home without much concern for the residents.

But even though foreclosure tends to benefit the lender, it does not mean that all of the rights of the renters are void. A renter still does have possessory interest in the property, which means that even though whoever purchases the home during foreclosure does own the property, they still must follow legal procedure in regards to the renter.

Proper procedure must be used in starting the eviction process. Although there is a possibility of delaying these procedures through the use of an experienced attorney, they typically only take a few days.

Filing for bankruptcy is one way to stop an eviction. As soon as you file papers for bankruptcy protection, the eviction process will be stopped and cannot continue until the bankruptcy process is complete.

Of course, it might be very likely that you have no plans to file for bankruptcy, so it is actually probably best to try to quickly find other housing options. The new owner probably will ask you to leave voluntarily prior to starting an eviction. This usually benefits both parties because the owner does not have to deal with the legalities of eviction, and the eviction will not mar your credit rating, which makes it difficult to rent a new place.

Since 2009, a new federal bill has given renters of foreclosed properties more leeway. Renters who have a month-to-month lease with their landlords may continue on for 90 days before they can be formally evicted. Renters with more long-term leases are allowed to stay until the lease expires, or 90 days if an individual buyer has purchased the property.

This law gives tenants some time to find a new place to live. Typically, though, don’t expect to stay in your rental for more than 90 days, because your lease is probably not going to be honored. You can, however, sue your landlord to recover the cost of finding a new rental and even for the cost of application fees, credit checks and sometimes the difference in rent.

Emely Peight likes blogging about bankruptcy issues. For additional information or for Phoenix bankruptcy help, or if you require a Phoenix bankruptcy attorney, please visit these bankruptcy websites now.

Leave a Comment

Previous post:

Next post: