With foreclosure rates in some cities reaching 40% of all properties listed, it’s not just the owner who is forced to move. What about all those tenants who have rented in good faith and paid their rent on time?
Should I continue to pay the rent?
Absolutely! Don’t stop paying your rent. You do not want to continue paying rent to the landlord if you are no longer your landlord. Pay the rent to the bank, lender or court appointed receiver, or if you are not sure who owns the property, talk to an attorney and open an escrow account and pay the rent into that account .
Does my lease protect me?
Not really. In some states, you lose any rights to the repossessed property.
1. Right-first, first-time rule applies in most states. That is, if the mortgage date was prior to the signing of the lease, you will lose all your rights of permanence.
2. Banks can foreclose in most cases, but check the laws in your state.
3. Unless you have section 8, your lease will survive until its termination date.
Do I have to move?
Possibly. Banks may want to keep you as a tenant, partly because of cash flow and partly because the occupied property will not be vandalized. But those who remain join the ranks of tenants from month to month, all of whom can be fired with proper notice, usually 30 days. You can expect banks to be absent owners and much less willing to make repairs or provide decent service. They are overwhelmed and if they want you out they can make your life hell
Cash for keys
Because the eviction is so expensive for the banks, they are willing to withdraw it. If you just leave, they are often willing to pay for moving costs and a small fee for a quick exit. Do your best to haggle!
Do I have any resources?
Yes. You can sue the landlord who just defaulted. Basically, when you sign a lease that has been terminated by foreclosure, the defaulting landlord has not met the full term of the lease. And then you can sue. True, the landlord is likely broke, but the judgment will last for many years, and when the landlord recovers, you may be able to collect.
Thank you for reading
Howard Bell