What happens when your landlord is facing foreclosure on the house you live in?
Most renters assume their landlord is paying the mortgage on their property. By the time the tenant discovers that isn’t the case, the house is being foreclosed on and they’ve received an eviction notice. In the past tenants had no protection from this, and had little to no right to remediation. Luckily, federal legislation was introduced to prohibit both landlords and lenders from ignoring their liabilities.
Protecting Tenants at Foreclosure Act
In 2009, Congress enacted the Protecting Tenants at Foreclosure Act (PTFA) which covers residential tenants that have a valid, active lease agreement, whether written or oral. This act legally requires your landlord to honor the full term of the lease agreement (even throughout the foreclosure proceedings) and to continue maintenance and repairs on the property if needed. If the home is purchased by a new owner, that new owner is required to assume the role of your new landlord and act accordingly.
If the lease has expired or you are on a month-to-month lease and the new homeowner intends to use the property, you legally have at least 90 days before you must vacate. The 90 days starts on the date the new homeowner takes ownership of the property.
What to Do
There are some things you will need to do once you learn the home is being foreclosed on. 1. Keep a log of the correspondence you have with your landlord. Try to make sure there is a paper trail for this – emails or handwritten notes. That way you have proof of your agreement in writing. 2. Continue to pay rent on time and in full every month. If you stop paying you can be evicted for not paying rent, and you also run the risk of losing protection under PTFA. 3. Start looking for a new place to live. 4. Once you receive an eviction notice, follow the instructions. If the notice violates your rights at all, challenge it as soon as you receive it. You will need to explain your rights under PFTA. If your rights are not adhered to, you should consider hiring an attorney to represent you.
Source: Home Guides, What Should a Renter Do if the Landlord is Being Foreclosed? 2014