The House I Rent Was Foreclosed On: Will I Be Evicted? What Are My Options?

Renters are often blindsided when the property they rent is foreclosed on. Most renters do not consider the fact that their home can be foreclosed on. If such a possibility occurs, they may be evicted, and their lease will not be honored. Why is this? What can a tenant do about it?

Most states do not have laws to protect a renter during foreclosure. If your lease was signed after the mortgage was begun, then the lender can sell the home even if there are renters living there with a valid lease.

This does not mean, however, that the foreclosure automatically ends the rights of renters. The renters of a property, if they are living on the property at the time, still have a possessory interest in the land. This means that although a new owner of a foreclosed property legally owns that property, he or she must follow proper procedure.

The new owner will have to begin the legal process of eviction. Sometimes an attorney can delay eviction proceedings, although typically only be a few days at most.

One way to stop an eviction is to file for bankruptcy. Once you file for bankruptcy the eviction process stops immediately. Even if the eviction order was already in place, the process will not continue.

Of course, it might be very likely that you have no plans to file for bankruptcy, so it is actually probably best to try to quickly find other housing options. The new owner probably will ask you to leave voluntarily prior to starting an eviction. This usually benefits both parties because the owner does not have to deal with the legalities of eviction, and the eviction will not mar your credit rating, which makes it difficult to rent a new place.

Because of the current recession, however, a 2009 federal bill has provided renters of foreclosed homes or properties a little protection. If you are renting by the month, you will have 90 days to leave prior to the beginning of eviction. If you have a long-term lease, the landlord will have to let you stay until the lease expires. However, even if the home does sell during foreclosure and you do have a new owner, the owner must allow you 90 days to find another place to live before eviction begins.

Under the new law, a tenant will have some time to determine where next he or she will live. However, the lease will still not be honored, and the renter will probably have to leave within 90 days. The renter can sue their landlord in court, and may be able to recover the cost of finding a new apartment, including some difference in the rent, and items such as application fees and credit checks charges.

Emely Peight likes blogging about bankruptcy issues. For more info or for Phoenix bankruptcy help, or if you need a Phoenix bankruptcy attorney, please visit these bankruptcy websites now.