What Happens to Your Apartment When Your Landlord Gets the Boot

By Kat Tretina on 26 February 2018 0 comments

Finding the perfect rental for you and your family is hard enough. After searching through hundreds of listings, touring apartments, and finally moving in, the last thing you want to worry about is any hiccups with the property. Instead, you want to focus on turning your new rental into a home.

Unfortunately, most tenants don't know if their landlord is keeping up with the building's mortgage payments until it's too late. Instead, you might only find out once the property has entered into foreclosure. When that happens, it typically means your lease is no longer valid.

Before you start panicking, it's important to know that tenants have rights, even in the case of a foreclosure. Here's what you should do if you find out your landlord's property has entered into foreclosure.

1. Understand tenant protections

Most states have their own tenant protection laws in place. For example, in Florida, you can remain in your rented home while it goes through the foreclosure process, which can last several months. When the proceedings end, you will likely have to find another place to live. If the foreclosed home is sold, the new purchaser may offer you the following options:

  • Enter into a new rental agreement. If the new owner intends to use the home as an investment property, they may offer to allow you to stay if you sign a new lease with them.

  • Move out in 30 to 90 days. The new owner might not want to deal with tenants. If that's the case, they must provide you with a written notice asking you to leave by a certain date. Depending on where you live, that notice period can range from 30 to 90 days.

The U.S. Department of Housing and Urban Development has a searchable database of tenant rights in each state in each state. You can use that database to find specific information about tenant protections in your area.

2. Document all correspondence

If your landlord sends you any notices or offers, such as offering you cash to move out early to speed up the foreclosure process, document the time, date, and key points of every conversation. When possible, have all conversations and negotiations via email so there's a written record.

3. Consider legal options

When you enter into a lease, your landlord is expected to adhere to those terms. If the landlord is delinquent on their payments and defaults on their mortgage, they violate those terms. You might be able to take your landlord to small claims court to recoup losses, including:

  • Moving expenses.

  • Time off from work to handle moving.

  • Apartment application fees.

  • Security deposits.

Keep in mind that if your landlord has defaulted on their mortgage, they may not be flush with cash. However, if the court rules in your favor, you could have years to collect those damages. It's a good idea to consult with a lawyer about your options and how to pursue any suit against your landlord.

3. Keep paying your rent on time

A common misconception is that you don't have to pay your rent while the home enters into foreclosure. Some people stop making payments completely or try to make them directly to the landlord's mortgage company. Doing so can hurt you. Your landlord is still entitled to rent payments while you continue to live in the home. If you fall behind on your payments, you can still be evicted from the home and your credit report could be damaged by late payments.

4. Start searching for a new home

Some states give you 30 to 90 days to stay in the home, even after a foreclosure sale has occurred. However, once you find out that the building has entered into foreclosure, it's a good idea to start looking for a new place to live right away. In certain high-demand areas, it can take weeks — sometimes even months — to find a new home, so the earlier you start, the better.

5. Follow eviction instructions

The new building owner will send you a notification with a set date you must leave the home by, along with detailed instructions. Almost always, you will be expected to leave the home in clean, well-maintained condition. You may be subject to penalties if you leave signs of visible damage. Make sure you follow those instructions carefully to avoid any surprise charges or problems.

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