You just received a notice that the rental that you are in is foreclosing. What now? The answer depends on the terms of your current contract. If you just signed a contract for one year then you could be protected by law for approximately 6 months and could be the full term of the lease.

Here is an actual story from one of my clients: My clients, we will call them Bob and Mary Smith, called to say their rental was foreclosed and they were just given notice by a law firm they had to be out in 5 days. I confirmed with them that they had been paying rent per their contract. I sent them the following information:

The Protecting Tenants at Foreclosure Act of 2009 was passed to provide tenants with some peace of mind that they will not be thrown out on the street once the home they are in is foreclosed upon.

In general, the new owner must take on obligations to the renters. They are:

· Renters must be given at least 90 days notice before they have to vacate.

· If the new owner is an investor the terms of the lease hold. The renter does not have to move until the lease runs out.

· The payment remains the same.

· If there is no lease in effect the 90-day rule still applies.

The rules for qualifying include:

· Renter can’t be the person that lost the home in foreclosure or their family.

· Lease needs to be an arms length transaction. Meaning it can’t be rented to a friend at the last minute.

· Rent needs to be at fair market value.

This ACT will cause some issues for banks and buyers but it does bring some fairness back to a system that was hard on innocent renters in the middle.

In the Smith’s situation an investor had bought the home so by law they could stay the length of their contract – 7 more months.The investor wanted them out within 3o days so they could sell the home. The law firm for the investor tried to get them out in five days then offered them ,$1,000 if out in 10 days $500 if out in 15 days and threatened them if they were there longer. Bob used the information I sent  and contacted the law firm. He  negotiated terms that both agreed on to vacate the rental. Those terms: One full months stay rent free, they received their current security deposits and cleaning deposits from the previous property manager, Payment of their new lease security deposit $1,600, new cleaning deposits and all moving expenses. In all they negotiated more than $4,000 worth of benefits for their discomfort. My clients had rights in this situation and used them to help them move into a rental that they liked better! They could have stayed the full 7 months if they wanted to. If it was not an investor but a person that bought the home as a primary resident then they would have had only 90 days to stay. Watch out for sneaky tricks: the law firm and new buyer tried to tell the Smith’s they would not accept his monthly rent check when he tried to pay them as a way of putting him at risk to take to court for non-payment. Bob threatened to go through his law firm and charge them the fees and they accepted his check. Know your rights and do not be bullied into moving out. Continue to pay rent or you may be at risk of defaulting on your lease. As always – See an Attorney to find out about the law as I am not a qualified person to discuss the law as it applies to each situation! Generally, you can see an attorney for $150 for an hour meeting and it generally pays you back in monetary but more importantly  - peace of mind!  Contact us with questions!

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