Rights in a foreclosed rental
Are there any? A few years ago the answer would have been a definitive No. Just the 30 days notice to vacate after the foreclosure sale. The lease would have been cancelled by the foreclosure, and treated just like the rest of the very many cases in the avalanche of high-risk loans and speculative property purchases that impacted the economy on a global scale. Today the economy is on the rise, and although the storm is not completely gone, things have improved considerably. You can still get caught up in the middle of the hassle between the landlord and the bank, but the federal law known as Protecting Tenants at Foreclosure Act, which passed in May 2009, gives more protections to the residential tenants.
One valuable modification affects the notice to vacate period. It increased from 30 to 60 days, and through the federal law, the qualifying lease is transferred after the sale to the bank or buyer. In the case where the buyer wants to move in the newly purchased property, occupying it as primary residence, your lease can be terminated, but you are still entitled to 90 days notice to vacate. If the new owner doesn’t intend to live there, you’ll be able to stay at least until the end of your agreement. Afterwards, your lease and tenancy are reviewed and if you qualify to remain there under a valid lease, the new owner will be your new landlord – the bank or the buyer. You will be asked to pay a monthly amount and your maintenance needs and repairs should be taken care of by the new owner. The month-to-month tenants receive the 90 days for relocation, also.
If, regardless of your lease term, you are asked to move out, one thing you can do is to sue your former landlord in small claims court. His impossibility to deliver the rental for the entire lease term violates the “covenant of quiet enjoyment” and, if you’re persistent enough, you’ll collect what’s yours eventually – moving and apartment searching costs, application fees, and the difference in the rental amount.