Renters' Rights When Landlord Is in Default

Even landlords can get behind on their payments, and when they do, they risk foreclosure. Fortunately for tenants, a new federal law protects their home even if the landlord defaults on the mortgage.

Foreclosure

Foreclosure happens when a property owner defaults on his mortgage and the mortgage lender seizes the property to sell at auction.

Protecting Tenants at Foreclosure Act of 2009

It used to be that tenants whose landlord was in default would lose most of their rights to remain in their homes, but due to the Protecting Tenants at Foreclosure Act of 2009, this is no longer the case.

Tenants With Leases

Under the new federal law, tenants with leases may now remain in their homes until the end of their lease term.

Month-to-Month Tenants

Federal law now requires that month-to-month tenants in foreclosed properties be given 90 days' notice prior to having their tenancy terminated.

Rent Control

Under the new law, a tenant in an area with rent control and "just cause" laws cannot lose their lease because of foreclosure. The new owner of the property must honor the previous lease, and can only evict or refuse to renew a lease for one of the reasons permitted under that area's rent laws.

References

• Consumer Credit Counseling Service: What is Foreclosure?
• Nolo: Renters in Foreclosure: What are Their Rights?
• San Francisco Tenants Union: Rent Control Coverage & Rent Increases