Tenants And Foreclosures
In the foreclosure crisis tenants too are getting swept away for absolutely no fault of theirs. Thus it is well for tenants to know that they have their rights and bargaining tools when foreclosures knock. The alarming point is the element of surprise. Most of the tenants are left totally in the dark until the eleventh hour. They pay their rent and are not supposed to know whether the landlord is current in mortgage payments. But suddenly an eviction notice from lenders arrives like a bombshell. The notice is backed by court orders and cannot be wished away.
Families with bag and baggage having children, pets and elders in tow will find it costly to find out new lodgings and move out quickly. The crux of the problem is that in the case of foreclosures the tenant does not have the traditional rights but the law provides for some basic protection, which smart tenants can avail of. The primary condition is that the tenant must be current in paying rent. Tenants can rely on the lease. The latter is a contract in which the responsibilities of both sides are categorically laid out and covers the two main possibilities – non-payment of rent and eviction.
The complication arises when the lender comes in between and forecloses on the property. Now this lender does not have contract with the tenant and therefore is not bound by the term of the lease. The tenant cannot enforce a lease against the lender.
As yet no detailed study has been made about how many tenants have been affected by the ongoing foreclosure crisis. A survey conducted by Mortgage Bankers Association found that in one out of five foreclosures the owner did not occupy the house. In other studies it was found that in urban neighbourhoods half (sometimes more) the foreclosed houses were pieces of investment and speculation.
When the housing bubble went up in smoke the speculators just walked away from a bad investment leaving the tenants in a state of limbo. The lenders contend that they do not have the wherewithal to be landlords and attend to rent collection, maintenance and other related matters. The lenders are only interested in the money market and want to sell off the unit as quickly as possible. For them it is easier if the houses are empty.
Some states are beginning to pass laws to provide protection to the tenants.
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February 18th, 2008 at 1:54 pm
This exact thing happened to me. I have been renting a home for 28 months and paying on time for all of these months and just got a letter saying the house I am living in has been sold on the courthouse steps. I called for more information and was told that I have 3 weeks to get out. I have 2 and 1/2 years of life in this house–all kinds of furniture, appliances, just stuff that I now have to find a place for, let alone a new home! I have been told that in GA I should have more time to vacate the premises. Does anyone know if this is true? Please point me in the right direction of what I can do. I work 65 hours a week and am trying to juggle all of this at once. I don’t mind vacating the property for the new owners (a bank), but need more than 3 weeks to do so. HELP!
February 24th, 2008 at 10:39 pm
I am a renter and the house Im living in went to foreclosure, do I get 30 or 60 days to move out? I also just had a kid, also if we are not out with in that period can the bank evict us? Please let me know I only have a week left. Thank you