Tenant Rights In A Foreclosed Property

We have written before about the need to be very careful when renting an apartment or home in todays market. There are many scams and just because someone has the keys to a property does not mean that they own it or have the authority to rent it. You can read our whole post about Rental Scams here however, the most important thing you can do to protect yourself is get ID from the person renting the home to you and find out if they even own the property. Typically you can do this at your local county tax office or a friend in the Real Estate, Title or Banking Industries can often check that for you.

This blog post is about what happens when you have already paid, moved in and settled only to find out your landlord is not paying the mortgage. Tenant Rights In A Foreclosed Property.

Foreclosure is looming and you are stressed out worried about  what will become of your lease. Sadly, there are many scenarios where you may never know it is coming unless there is a notice posted on the property. Closer to the actual auction sale date you may see people driving by and checking out the property. A few brave ones may even ring the doorbell. These are typically investors that want to see what the property looks like in advance of the foreclosure auction. Many will have no idea that you are a tenant and not the owner. You do not have to talk to them and you probably would be better off referring them to your landlord.

So what are your Tenant Rights in a Foreclosed Property? These rights changed with passage, in 2009, of the Protecting Tenants at Foreclosure Act (PTFA) this law say that any bona fide lease entered into prior to the notice of foreclosure remains in place when the owner-by-foreclosure (OBF) purchases the property to be used for any purpose other than as a primary residence. Yes, you read that right.. a real lease that is in place prior to the notice of Foreclosure ..has to be honored by the new owner as long as they did not buy it to use as their principal residence.

There is another criteria that must be met as well. The lease must be for fair market value. The PFTA is very vague however, and it does not really spell out any set way that this can be determined. I would suggest that a copy of current rental ads should be pretty strong evidence that your rent is at market value.

So what if the new owner wants to use the property as their principle residence? Well, In this case you can be given a 90 day notice to vacate the property. Sort of a worse case scenario yes, but you cannot be forced out without adequate time to find a new place.

This Act is in effect until The end of 2014.

Again, use caution when leasing any property. Make sure you know who you are dealing with and if the worst thing happens - know your rights.