Tenant Rights in Regards to Property Foreclosure
One often overlooked population that suffers from foreclosure as much as or more than homeowners are the tenants of a rental home that is in foreclosure. While homeowners know that foreclosure is possible or imminent when they can no longer make their payments, those who rent or lease often have no clue that the home or building they live in is in foreclosure until they see the sign out in front. Fortunately, federal law protects tenants from losing their homes because of foreclosure.
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The Protecting Tenants at Foreclosure Act of 2009
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Prior to the Protecting Tenants at Foreclosure Act of 2009, tenants whose former landlords defaulted on their loans were offered few protections against eviction. The Protecting Tenants Act, however, requires new owners to allow current tenants to remain in their homes under certain conditions. Tenants with leases are protected from new owners that would break the lease, while month-to-month renters are now shielded from losing their homes with less than three months notice.
Term of Lease
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Renters who had a lease for a property that has fallen into foreclosure are allowed to stay in their home according to the terms of the original lease. As long as the renter continues to pay as the terms of the lease state, the renter can only be evicted if the purchaser plans to live in the property himself. In this instance, the new owner of the property must give the renter 90 days notice to vacate the home.
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Month-to-Month Tenants
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The federal legislation that makes up the Protecting Tenants from Foreclosure Act recognizes that many renters whose home has been sold or taken over by a lender are month-to-month renters. In this case, the aspect of the Protecting Tenants act that allows tenants to remain in their home for 90 days eclipses state laws, which often give landlords the power to remove renters with 60 days notice or even less, unless they have a lease that delineates the terms of the rental agreement.
Special Situations
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Section 8 renters are included in the Protecting Tenants at Foreclosure Act, as well, meaning that all the protections included in the act apply to Section 8 housing, even if the new landlord does not intend to apply to rent the property as Section 8 housing. Tenants who live in homes or buildings in cities with rent control "just cause" eviction laws enjoy these protections in addition to those afforded by the Protecting Tenants act. Foreclosure and new ownership do not override these local ordinances.
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