The Legal Rights of Renters During Property Foreclosure
Legal rights of renters during property foreclosure are determined by the terms of state law, any lease or rental agreement in effect and the requirements of the Protecting Tenants at Foreclosure Act of 2009. Tenants' rights to return of deposits and a habitable residence remain in effect during foreclosure but as a practical matter might prove difficult to enforce. Federal statute primarily protects tenants' rights to prior notice before termination of the rental agreement or lease.
Other People Are Reading
-
History
-
Between 2005 and 2009, housing foreclosures skyrocketed. Many homes under foreclosure were occupied by tenants who were often unaware their residence was being foreclosed upon until being ordered to leave. Though some states' laws provided protection to tenants with written leases, in most states the mortgage holder's foreclosure took precedence over written leases as well as month-to-month rentals. In 2009, Congress sought to protect homeowners and renters with a series of statutes, including the Protecting Tenants at Foreclosure Act, the Helping Families Save Their Homes Act and the American Recovery and Reinvestment Act.
Significance
-
The 2009 federal statutes require that new owners of properties under foreclosure--the bank or an immediate subsequent purchaser--give tenants who do not have written leases at least 90 days notice before terminating the rental. If the renters have a written lease agreement, then the tenant has the right to remain in the home through the end of the lease, and to receive at least 90 days notice of nonrenewal of the lease.
-
Exception
-
There is one significant exception to the federal statute's provision that renters with written lease agreements can stay for the duration of their leases: If the subsequent purchaser intends to move into the house as their primary residence, then the lease can be terminated, but the new owners must still give the renters at least 90 days notice to quit.
State Law
-
State law might provide greater protection for tenants during foreclosure than the federal statutes. If they do, the greater protection applies. State laws also determine a renter's rights regarding return of any last month rent and security deposits and payment for maintenance and repairs. The federal renters protection statutes do not alter these state law provisions.
Rights in Written Leases
-
Foreclosure generally abrogates tenants' rights under leases. However, under the protection of the federal statutes, tenants with written leases get at least some benefit of those written leases for the duration the lease was anticipated to last. Tenants may be able to enforce additional terms within those leases during the time period they remain in effect. Rights contained in written leases are enhanced if renters record those leases in the local land records, ensuring that mortgagors and future purchasers are aware of the lease existence and terms.
Maintenance and Habitability
-
Common law and state laws protect tenant's rights of habitability; that is, to a residence with functional plumbing, safe wiring, and heat, free from toxins and rodents. These rights remain in effect through foreclosure. However, they might be difficult to enforce when a distant bank is the property manager rather than an identifiable landlord. Renters can improve their ability to enforce these rights by sending clear, concise written notice of any problems or necessary maintenance to both the landlord and the mortgage holder during the foreclosure process.
Right to Maintain Personal Property
-
Tenants maintain the right to the possession and integrity of their property during foreclosure. Mortgage holders or other creditors of the landlord have no right to enter the tenant's dwelling unit or to seize or remove the tenant's car, furniture, or other property. Such actions constitute theft and can be enforced by law enforcement authorities.
-
References
Resources
- Photo Credit Cindy Hill
