Tenant Rights with Owner Foreclosure

Starting in 2007, the U.S. home foreclosure rate began to increase. Although we tend to think of the homeowner first when foreclosure is imminent, the tenant who has been leasing from that homeowner is also adversely affected.

New Laws Protecting Tenants

Up until recently, when a landlord foreclosed on a home, tenants had no recourse and faced certain eviction. In the spring of 2009, however, congress passed the "Protecting Tenants at Foreclosure Act," giving substantial rights to tenants caught in the middle of a foreclosure.

Time Frame

If the tenant holds a one-year lease, the bank or new owner is required to honor it and the tenant can stay in the home until the end of the lease. The exception to this is if the new owner plans on living at the property, in which case she can break the lease and give the tenant 90 days to move. If there is no written lease, or if the lease is month-to-month, the tenant is entitled to at least 90 days to move after the foreclosure.

Rent Payments

To protect his rights under a lease, the tenant should continue to pay rent, on-time, to the former landlord. Once the foreclosure process is complete, upon the Trustee Sale, the new owner or the bank will be entitled to rent payments.

Utilities

The tenant has the right to full utility service on the property. If the landlord traditionally paid for the utilities then, by law, she must continue to do so. It is illegal for anyone to try to force a tenant out of a home by turning off the utilities.

Rights within the Lease

Certain basic rights are granted to tenants under the standard lease that remain in effect even during the foreclosure process. Some of these include the right to have proper plumbing, heat and safe wiring.

References

• Tenant Foreclosure Protections
• Protecting Tenants at Foreclosure Act

Resources

• Renters in Foreclosure