Tenants' Rights in Foreclosures in Virginia
Tenants living in foreclosed properties in Virginia do not have much protection from a foreclosure-related eviction. Their key rights stem from a federal law. There are no state laws in Virginia that are specifically aimed at protecting renters from the effects of foreclosure; however, two state laws with universal application in any circumstance can help in a foreclosure.
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The PTAF Act
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The 2009 federal Protecting Tenants at Foreclosure Act gives tenants everywhere two protections that most of them -- and all tenants in Virginia -- never had before. The first requires foreclosing lenders to honor leases in existence before the foreclosure. Previously, leases were voided upon property foreclosure. For a tenant with a month-to-month lease, this rule won't provide much help. But for tenants who have fixed-term leases in which the fixed term has not expired, it will buy them more time. In this instance, the lender cannot take steps to evict the tenant until the term has ended. The second requirement mandates lenders give tenants a 90-day notice prior to initiating an eviction filing. Under normal circumstances, a landlord need only give a tenant a 30-day notice before starting an eviction without a cause, such as failure to pay rent.
Right of Redemption
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The foreclosure laws in Virginia allow lenders to chose a judicial or nonjudicial process. Most lenders choose the nonjudicial process because it is cheaper and quicker. There is no period of redemption when the nonjudicial process is used. That is, the owner has no ability to come back after the foreclosure to redeem the property through repayment of the loan. Even in a judicial process, a right of redemption is only a remote possibility -- the judge has the authority to attach a redemption period to the foreclosure if she chooses. The value to the tenant of a right of redemption is that it will result in the tenant being able to stay in the property longer. The lender cannot initiate an eviction during the redemption period.
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Security Deposit
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Section 55-248.15:1 of the Virginia Residential Landlord Tenant Act requires a landlord to return a security deposit if he does not forward it to the new owner. If the tenancy has been longer than 13 months, interest accrues on the deposit at a rate that varies with the consumer price index. Tenants have the right, under this act, to take the former owner to small claims court if he doesn't pay up.
Property Maintenance
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A common problem tenants in properties that are in preforeclosure is the owner's failure to maintain the property. If an owner knows he will lose his property to foreclosure, he has no financial incentive to keep it up. If a lender takes the property over, it wants to resell the property as quickly as possible, not rehabilitate it. Section 55-248.13 of the Virginia Residential Landlord Tenant Act requires owners of record to comply with building and housing codes materially affecting health and safety. Their remedies include filing complaints with the local building and housing inspectors who have a variety of powers to compel the owner to make necessary repairs.
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References
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