Do Foreclosures Have to Be Vacated When Sold?
The housing crisis and recession that began in 2007 catapulted the housing market into its worst foreclosure crisis. While government measures to keep distressed borrowers in their homes are successful on some fronts, 250,000 new families enter foreclosure every three months in 2011, according to the Mortgage Bankers Association. Once the reality of foreclosure sets in and the home is sold at auction or repossessed by the lender, occupants generally must vacate the premises.
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The Basics
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The foreclosure process is a legal avenue by which a lender can take title and possession of a home that secures a delinquent mortgage debt. The foreclosure timeline varies by state, but generally it takes at least three months from the first missed payment to complete. Afterward, the former owner becomes no more than an unlawful detainer, or tenant wrongfully in possession of the premises. The lender or new owner may have to resort to the timely and costly eviction process to remove him.
Federal Law
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Prior to May 20, 2009, tenants were susceptible to unlawful eviction by the new owner of a foreclosed home by being induced, coerced, and sometimes forced to vacate the premises without proper notice. The Protecting Tenants at Foreclosure Act is a federal law that ends Dec. 31, 2012. It gives lease-holding tenants of foreclosed borrowers the right to remain in the home for the remainder of their lease if the home was purchased by a private investor or repossessed by the lender. It requires that they be given at least 90 days notice if the new owner intends to occupy the home. Month-to-month renters must receive at least 90 days notice to vacate before the new owner may proceed with eviction.
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Cash for Keys
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The lender or new owner of a property may offer a foreclosed-upon tenant or homeowner a certain amount of cash to move out quickly. Cash-for-keys is a transaction by which the new owner encourages the occupant to leave the home soon and in good condition in exchange for a specified amount of cash. By accepting the cash, the occupant essentially relinquishes any rights that normally apply under eviction or landlord-tenant law. The amount of cash for keys is generally higher if the tenant is required to move out more quickly.
Considerations
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Because a landlord is obligated to deliver the premises to a tenant for the life of the lease agreement, those who must move after an owner-occupant buyer purchases the home may seek legal recourse against their landlord in small claims court, states the NOLO website. By failing to pay the mortgage and falling into foreclosure, the landlord fails to comply with the covenant of quiet enjoyment. The covenant is implicit in all rental agreements, and it means the tenant has the right to occupy the home free of disturbances by claimants.
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References
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