Renter's Rights When Renting a Foreclosed Home

When a rental home is foreclosed, the renters may find themselves between and a rock and a hard place---or out on the street. Tenants rights when residing in a home under foreclosure vary depending on the terms of the rental, but the Protecting Tenants at Foreclosure Act of 2009 provides some basic protection from being evicted without prior notice.

Renters' Rights Before Foreclosure

Renters' rights vary under different states' laws. Most states protect tenants from unnecessary landlord interference, including barring the landlord from entering the rental unit without permission or from taking a tenant's personal property. State statutes set out the requirements for obtaining, keeping and returning last-month-rent and security deposits, as well as procedures for serving eviction notices and the grounds for which eviction may be sought. State laws often define the common law right of renters to a habitable, safe, sanitary dwelling place. If the renter has a written lease, the renter has a right to whatever terms have been agreed to in the lease in addition to those set out in state law.

Protecting Tenants at Foreclosure Act

Before 2009, renters had few rights once a mortgage holder filed foreclosure on the landlord. The Protecting Tenants at Foreclosure Act of 2009, together with similar provisions in the Helping Families Save Their Homes Act of 2009 and the American Recovery and Reinvestment Act of 2009, requires that all tenants receive at least 90 days' notice of termination of any residential rental under foreclosure. Additionally, if the renters have a written lease, then the mortgage holder or subsequent purchaser must permit the tenants to reside in the home until the end of the lease period. An exception to this provision occurs if the new owners intend to move into the home as their primary residence, in which case they may terminate the lease with 90 days' notice.

Written Leases

When a renter does not have a written lease, he or she is deemed to be renting month-to-month only, though state laws may require more than one month's notice to terminate a month-to-month rental. A written lease provides renters with greater protection and stability, and with stronger rights under the Protecting Tenants at Foreclosure Act.

Recorded Leases

The power of a written lease is enhanced when renters record the lease in the local land records, ensuring that mortgagors and subsequent purchasers are aware of it. Renters can file their leases in the land records for a small per-page filing fee. Filing the lease also provides proof in court that the lease was entered into prior to the notice of foreclosure.

Who Receives the Rent Payment

Renters have a right to have their rent payments properly attributed to their tenancy. Many mortgages have a provision requiring that when the mortgage payments fall behind, rent be paid directly to the mortgage holder. Tenants have a right to receive notice if the person who should receive the rent changes. If the tenant continues to pay rent unknowingly to the landlord, the tenant has a right to have those payments accounted towards his rent.

Maintenance

Once a home is in foreclosure, the renter is likely to have difficulty getting necessary maintenance done. To best preserve his rights, the renter should notify the mortgage holder and the landlord in writing of the maintenance request; then, if within the means of the tenant, he should conduct the repairs and send the mortgage holder and landlord copies of the receipts for materials and an invoice for labor. This greatly enhances the renter's ability to recoup these costs later.

Termination of Rental

Tenants have a right to defend against a notice of eviction by whatever process is allowed under their state's laws. A renter may not be able to preclude being compelled to move out of a rental home that is in foreclosure. However, if she is not behind on the rent, she should be able to avoid the negative mark of an eviction on her record. Renters in a home under foreclosure may not be able to avoid losing their place of residence, but they have a right to defend against wrongful eviction within the full terms of state law and any written lease or rental agreement.

References

• Department of Housing and Urban Development: Protecting Tenants at Foreclosure
• Tenants Rights Information From Benchmark Institute
• Foreclosure and Homelessness Prevention From the National Coalition for the Homeless

Resources

• Tenants and Foreclosure: Blogspot