Can a Landlord Rent You a House in Foreclosure?
"Renters have become the collateral damage of the foreclosure crisis," concludes a 2010 article on the topic published by Northwestern University. While renters' rights associated with foreclosures have expanded with the housing crisis, they offer only limited protections in most situations. There are no outright prohibitions against landlords renting units in foreclosure and only a few regulations placing notice requirements on the rental of soon-to-be foreclosed units.
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Notice Restriction
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No law prevents landlords from renting a property that is in foreclosure. Only six states -- Arizona, Minnesota, Nevada, Oregon, Vermont and Wisconsin -- along with Chicago, require landlords to disclose an impending foreclosure to prospective tenants, according to a survey conducted by the National Housing Law Project. Minnesota law restricts the type or duration of lease for a property in foreclosure.
Do-it-Yourself
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In many states, it is possible to find out if a property is in foreclosure before you sign a lease. In states in which the sole or predominant process of foreclosure is nonjudicial -- essentially a process composed of notices -- often a notice of default is recorded on the property title. In states in which the process is judicial, the filing of a lawsuit begins the foreclosure process. Both types of actions produce public records you can find at the county recorder's and county court clerk's offices, if not online.
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Notices During and After Foreclosure
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If you are already living on the property, you might receive notice about an impending foreclosure from a lender. More than a dozen states, including California, Idaho and Montana, require lenders to notify tenants at least 30 to 90 days before a foreclosure sale. The federal Protecting Tenants at Foreclosure Act of 2009 requires foreclosing lenders and buyers to provide tenants with at least 90 days written notice before initiating an eviction action.
Eviction Protection
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The reason you would want to avoid renting a property in foreclosure, of course, is because many foreclosing lenders evict tenants after foreclosure. However, three states -- New Hampshire, New Jersey and Massachusetts -- prevent most evictions after foreclosure unless the tenant has failed to pay rent or has violated some other lease provision. This protection is also extended to tenants in at least 22 cities, -- most in California and New York -- and to elderly and disabled tenants in Connecticut.
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References
- Medill Reports, Northwestern University: Renters Face Eviction, Betrayal in Landlord Foreclosure; Kathryn Lindsay Dobies and Erin Halasz; February 2010
- National Housing Law Project; State and Local Tenant Protections; November 2010
- Clark County Nevada; 10 Steps to Find Out if Your Rental Home is in Foreclosure
- Nolo; The Foreclosure Survival Guide
- Nolo: Renters in Foreclosure -- What Are Their Rights?
- Photo Credit san francisco image by ebulle from Fotolia.com
