Is a Landlord Liable to a Tenant for Letting the Property Go Into Foreclosure?
Full Question:
Answer:
The landlord is not liable for the fact that the property went into foreclosure as long as proper foreclosure procedures are followed. You must be served with statutory notice and the new owner will be obligated to honor the lease terms if they don't provide for termination in the event of foreclsoure. If you have a lease that has more than 90 days left, in most cases, the new owner cannot evict you until the end of the lease. There are two exceptions.
•If the new owner wants to use your home as their primary residence, the new owner only has to give you a 90-day notice to leave after they become the owner.
•If you do not pay your rent or violate other terms of my lease the new owner may evict you
Under the Protecting Tenants at Foreclosure Act of 2009, the purchaser at foreclosure takes the property subject to any unexpired lease. The law also requires the foreclosure auction purchaser to give notice to vacate to any month-to-month tenant. The notice must be served at least ninety days prior to its effective date. The new federal law applies to both single-family homes and large apartment complexes.
Lenders, purchasers of foreclosed properties, and residential tenants should be aware of the rights and obligations contained in the Act. Pursuant to the Act, an immediate successor in interest “of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property” is required to (i) honor the remainder of the term under a “bona fide lease” entered into prior to the notice of foreclosure and (ii) give at least 90 days notice to vacate to a “bona fide tenant” who does not have a lease or has a lease terminable at will.
Under the Act, a lease or tenancy shall be considered “bona fide” only if--
•the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
•the lease or tenancy was the result of an arms-length transaction; and
•the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy.