Foreclosures and Renters: What Are Your Rights?
When you hear about foreclosures on the news or read about foreclosures in the newspaper, you will see that most of the attention is placed on the homeowner in trouble. Unfortunately, it seems as if renters have simply just been forgotten. That doesn't, however, mean that they are exempt from foreclosure related evictions. If you are a tenant of a rental property, foreclosure should be a concerned of yours.
The most common fear of renters is coming home to a sign on the door stating that they must be out within twenty-four hours. Typically, this will not happen. Many states have laws that are designed to prevent this from happening. Although it does vary, depending on the state, banks are usually required to post foreclosure notices on the building within twenty days. These are notices that you should be able to spot.
Another way that you can know if your rental unit is headed for foreclosure is by regularly examining listings. These foreclosure listings are easy to find online. Properties in foreclosure should also be listed and be available for viewing in your local city, town, or village offices. Although you may want to refrain from outright asking your landlord if he or she is facing foreclosure, especially if no signs are showing, it may help to calm your fears.
Even if your building is being foreclosed on, you may not necessarily have to start packing your bags. Some states make it so that your lease trumps the foreclosure. This protection often occurs when a new owner is unable to afford their mortgage. For example, is your one or two year lease with the previous owners? If you entered into the rental agreement before the mortgage in question was obtained, the buyer of the foreclosed property may have to honor your lease.
Renters are also provided with a small amount of foreclosure protection when they rent from a rent stabilized unit or when they are a part of a federal housing program. In many states, those on Section 8 cannot be evicted from the rental unit without reasonable cause, even when ownership is transferred. Some states and local governments also state that foreclosure is not a good enough reason to evict those in rent stabilized housing units. Since these exemptions vary depending on local and state governments, be sure to verify this information ahead of time.
Although you may be offered some protection as a renter, the new owner of your property may have other plans. Know that you cannot be threatened or forcefully removed from the premises until a proper eviction notice has been served. In most areas, this is not something that just happens overnight, so you should have some notice. Until that time arrives, you should not have your locked changed, have your belongings moved from the premises or have your utilities shut off. In the event this does happen, contact the authorities and a lawyer. In the event your utilities are shut off, the health department can and should be notified.
Another concern that renters have, concerning foreclosure evictions, is their security deposit. Since most rental properties require the payment of a security deposit, those forced to move unexpectedly are often left in a pinch. In all honesty, it doesn't matter how well clean or cared for you kept the rental unit, you may have difficulty recouping your security deposit. New owners are often exempt by law from having to pay it. You can sue the previous owner, your last landlord, but this process can be time consuming and costly.
As you can see, you do have multiple options when facing foreclosure, as a renter. For more assistance, you will want to consult with a housing counselor that is approved by HUD (The United States Department of Housing and Urban Development) or a lawyer. If and when you consult with a lawyer, select one that has experience handling legal matters that concern housing and tenant rights.
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