Foreclosure is the legal method lenders use to get control of or sell a home when the mortgage isn’t being paid. A federal law enacted on May 20, 2009,”Protecting Tenants at Foreclosure Act,” gives tenants rights when the landlord is facing foreclosure. The laws supersedes state laws concerning tenants’ rights. A tenant living in a home facing foreclosure does not need to proceed immediately.
A lease is the rental agreement signed by the tenant and owner which specifies the lease terms, like the length and amount of rent due every month. Leases that existed before the property has been foreclosed on can’t be terminated by means of a foreclosure occurring after May 20, 2009, based on NOLO. The tenant can stay in the dwelling until the lease ends, unless whoever purchased the foreclosed property is going to reside at the rental unit. A tenant living in a foreclosed home the new owner intends to use as a main residence has to be given 90-day notice before the lease is terminated.
Tenants that are month-to-month, meaning there’s no signed lease set up, must be given 90 days notice before having to move. Tenants who don’t proceed after receiving the note can be subject to eviction by the new owner. Eviction is the authorized proceeding utilized by a landlord to remove a tenant from a rental home.
Utility services which were supplied from the foreclosed landlord, for example heating, has to continue while the tenant is legally permitted to occupy the rental unit, as stated by the Home and Economic Rights Advocates (HERA). The new owner must keep the utility providers on, even if that owner is the lender which foreclosed on the property. The new owner is also responsible for repairs, and the tenant has the right to submit requests to the new owner for repair and maintenance problems.
A tenant can take legal action against a former landlord that had been foreclosed on if her lease had been terminated, as could occur if the new owner decides to reside in the rental home. Leases typically possess a clause which ensures”silent joy,” or uninterpreted occupancy of this rental unit, for the length of the lease. A lease which ends early because of foreclosure violates the enjoyment clause. The tenant can file a civil suit against the landlord to recover costs related to the breach of the lease, like moving expenses.