More “ripples” from the mortgage crisis…
In my last post, I mentioned the impact of the foreclosure crisis on the rental market. Well, here is yet another scenario seen in the “wake” of the crisis: tenants that pay the rent, but landlords that don’t pay the mortgage. Take a look at this article that chronicles such tenants’ struggles:
Among their battles with landlords, real estate agents and financial institutions, these tenants face legal battles to stay in their homes (at least, temporarily) when a landlord’s mortgage has been foreclosed (or, will be foreclosed – in the case of a landlord that simply abandons the property). Unfortunately, there is no guarantee that new owners of the property will provide any assistance, accept rent payments or allow tenants to stay. However, tenants do have legal rights during the foreclosure process.
The Protecting Tenants at Foreclosure Act of 2009 is a federal law that provides temporary protection for tenants with landlords in foreclosure. It seeks to allow tenants to arrange for alternative housing in a timely fashion and prevent tenants from being forced out of their homes seemingly without warning. In general, a tenant has the right to stay under the current lease (if it was entered into before receiving notice of the landlord’s foreclosure) until the time at which a new party owns the property. This timeframe can vary depending on the length of the “redemption period.” Regardless of when that time is, the tenant does not have to move out of the property until he or she receives a 90-day notice to vacate the premises and those 90 days have expired. The only major exception to the 90-day rule is if a new owner (or, even a subsequent buyer) intends to make the property his or her primary residence. There are other exceptions and issues which should be discussed with your attorney, as always different facts lead to different answers and solutions.