Renters Rights in a Foreclosure

You have been renting a home for awhile now, and suddenly you are told you must
leave because the home is being foreclosed on. Where do you go for help and
what are your rights?
The most common fear of renters is coming home to a sign on the door stating
that they must be out within twenty-four hours. Typically, this won't happen.
Many states have laws that are designed to prevent this from happening.
Although it does vary, depending on the state, banks are usually required to
post foreclosure notices on the building within twenty days. These are notices
that you should be able to spot.

Another way that you can know if your rental unit is headed for foreclosure is
by regularly examining listings. These foreclosure listings are easy to find
online. Properties in foreclosure should also be listed and be available for
viewing in your local city, town, or village offices. Although you may want to
refrain from outright asking your landlord if he or she is facing foreclosure,
especially if no signs are showing, it may help to calm your fears.

Even if your building is being foreclosed on, you may not necessarily have to
start packing your bags. Some states make it so that your lease trumps the
foreclosure. This protection often occurs when a new owner is unable to afford
their mortgage. For example, is your one or two year lease with the previous
owners? If you entered into the rental agreement before the mortgage in
question was obtained, the buyer of the foreclosed property may have to honor
your lease.

Renters are also provided with a small amount of foreclosure protection when
they rent from a rent stabilized unit or when they are a part of a federal
housing program. In many states, those on Section 8 can't be evicted from the
rental unit without reasonable cause, even when ownership is transferred. Some
states and local governments also state that foreclosure is not a good enough
reason to evict those in rent stabilized housing units. Since these exemptions
vary depending on local and state governments, be sure to verify this
information ahead of time.

Although you may be offered some protection as a renter, the new owner of your
property may have other plans. Know that you can't be threatened or forcefully
removed from the premises until a proper eviction notice has been served. In
most areas, this is not something that just happens overnight, so you should
have some notice. Until that time arrives, you should not have your lock
changed, have your belongings moved from the premises or have your utilities
shut off. In the event this does happen, contact the authorities and a lawyer.
In the event your utilities are shut off, the health department can and should
be notified.

Another concern that renters have, concerning foreclosure evictions, is their
security deposit. Since most rental properties require the payment of a
security deposit, those forced to move unexpectedly are often left in a pinch.
In all honesty, it doesn’t matter how well clean or cared for you kept the
rental unit, you may have difficulty recouping your security deposit. New
owners are often exempt by law from having to pay it. You can sue the previous
owner, your last landlord, but this process can be time consuming and costly.

As you can see, you do have multiple options when facing foreclosure as a
renter. For more assistance, you will want to consult with a housing counselor
that is approved by HUD (The United States Department of Housing and Urban
Development) or a lawyer. If and when you consult with a lawyer, select one that
has experience handling legal matters that concern housing and tenant rights.

A Renters Options with Foreclosure

One of the most common decisions made by renters who have either been served
with a foreclosure notice or see it coming is to throw in the towel and move.
Many decide this is the safest and easiest approach to take. With that said,
know that you may face a number of obstacles. Unless your landlord has
received a foreclosure notice, they don't need to let you out of your lease.
If this happens, you legally need to continue paying rent.

Next, you may find it difficult or impossible to retrieve your security deposit.
This may be a problem if you weren’t anticipating to move, as you may not have
the funds needed to pay a new security deposit on a new property. This doesn’t
mean that you'll be left homeless or put out on the street. Remember that you
don’t have to move until you receive a legal eviction notice. Next, talk to
prospective landlords about your situation. if your current landlord can vouch
that you make on time payments, you may be able to make your security deposit in
affordable installments.

As previously stated, you do not legally have to move from your rental unit until
you have received an eviction notice. For that reason, many renters, especially
those who were unprepared, make the decision to stay and stand their ground. If
you want to do this, know that you may face some resistance from the bank or new
property owner. With that said, until you receive an eviction notice, you can't
be forcefully removed from the property, your utilities can't be shut off, and the
locks can't be changed on you.

Another option that you have is to approach the financial lender in question.
Your best luck is when dealing with either a locally owned or operated bank. When
you do, you'll have two different options. Ask to stay in the home or rental unit.
Unfortunately, some banks will automatically start the eviction process as soon as
a property enters into foreclosure. This is partly due to the fear that the
property won't promptly sell. Many banks don’t want the hassle or liability of
having to deal with a renter. If you are a long-term renter, plead your case,
which should include prompt and on time rent payments.

Next, you can offer to buy the property. Even if you aren’t in the best financial
standing or if you are unprepared to make the often required down payment, the
lender may be willing to work with you. Once again, your chances improve when
dealing with a locally owned or operated bank. If you are a long-term renter and
can prove that you have made consistent on time rent payments, have the money
needed to pay for a mortgage or home loan, the lender in question may be able to
work with you. After all, they want to sell the property and recoup their lost
money as quickly as possible.

Although some banks will start the eviction process right away, others will not.
This is normally when they believe they can sell the home quickly, like in an
auction. If this occurs, you may want to wait and workout an agreement with the
new owner. If you are in an apartment complex or a multi-family home, your chances
of being able to stay are pretty good. However, if you rent a single family home,
the new buyer may intend to move him or herself in.

As an important reminder, you can always throw in the towel and start preparing to
move when your rental unit is facing foreclosure, but you don’t have to. As a
renter, you have a number of legal rights, as well as options.

Renters Losses in Foreclosure

Much attention is placed on homeowners facing foreclosure. Yes, this
attention is well deserved, but it appears as if many media and news
organizations have forgotten about the impact foreclosure has on renters.
If you are a renter living in a property that is facing or is in the
middle of foreclosure proceedings, you may not know what to do or where
to turn. For you, it may seem like you are at the end of your rope.

When facing foreclosure, many renters will simply just cut their losses
and relocate. This may mean having to move without recouping a security
deposit. Unfortunately, there are some renters, possibly you, who can't
up and afford to relocate, especially without getting your security
deposit back. When renting a new apartment, most landlords require a
security deposit and if you weren’t prepared to move, you may not have
the money.

There is another serious issue that renters forced to relocated are facing.
Foreclosures are on the rise. What does this mean? It means that an
unprecedented number of homeowners have no place to live. This often turns
them into renters. Unfortunately, this lessens the availability and rental
choices for renters, like yourself. It may mean that you have to pay more
in rent or move to another city or town.

As previously stated, many renters decide to throw in the towel and relocate.
If you are unable to do so, you may want to wait and see what happens. Of
course, during this time you should take steps to protect yourself. Save
enough money to cover your moving expenses, including a new security deposit.
You will be prepared in the event that you are legally evicted from the
property. You should, however, know that eviction from a property in
foreclosure is not something happens overnight. You usually have a few days
or even a few weeks to make alternative living arrangements.

Before making a decision, all renters are urged to look at the property in
question. Are you renting a unit from an apartment complex or a multi-family
home? If you are, you may be able to stay. Investors at foreclosure auctions
often purchase rental units. These investors want to see a return on their
profit. The way to do this is to make sure their rental units are filled with
quality, on time paying tenants. With that said, if you are renting a single-
family home, you may want to prepare to relocate. Unlike with rental
properties, single-family homes are often purchased in foreclosure auctions by
those looking to live inside.

Despite the fact that some new rental property owners may be willing to work
with you and let you continue to rent, there is no guarantee that the property
will sell. When low bids are received at a foreclosure auction, the original
lender often steps up to the plate and buys the home. In this case, the home
is no longer considered a foreclosure, but a REO (real estate owned) property.
Unfortunately, this doesn’t always workout well for renters. With REO
properties, lenders, who are also known as investors, may start the eviction
process right away. Many cannot or do not want to become property managers,
even just for a month or two.

As previously stated, foreclosures can occasionally come as a surprise to
renters. Your landlord will receive multiple warnings and notices, but they
are not required by law to share them with you. Renters usually become aware
of foreclosure proceedings when notices are placed on the building. At this
point in time, you should contact the lender in question. See what your
options are. Can you buy the property yourself? If you can prove that you
have a stable income, the lender in question may be willing to work with you.

As a recap, foreclosures are having a significant and usually negative impact
on renters. If you are a renter who lives in a property that is facing
foreclosure or if you fear foreclosure is looming, you may want to start
making preparations to ensure that you are well prepared for what is to come.

Pre-Foreclosure Sales

Are you looking to buy a new home? If so and if you are on a limited budget, you may
use the internet to research foreclosures. The sale of foreclosed properties is on
the rise, and due to their affordable prices many people are looking into snatching
them up either for a quick flip, or for their personal home. Somewhere in the mix you
may find homes for sale that are in the pre-foreclosure stages, as you can gather from
the name, these are properties that are headed for foreclosure, but not yet there.

As stated above, some pre-foreclosure properties are listed available for sale online.
These may appear on foreclosure listing websites, but not always. There are two main
ways in which pre-foreclosures are sold. A real estate agent is used or the current
homeowners list the home as for sale by owner. As for who you should do business with,
it depends on your own personal preference.

One of the many pros or plus sides to buying a pre-foreclosure that is listed through a
real estate agent is communication. That real estate agent is whom you will have direct
communication with. This may give you comfort and peace of mind. It is no secret that
homeowners facing foreclosure are angry and upset. You can discuss the property and
talk freely with the real estate agent in charge of the sale, but without having to worry
about angering or offending them.

The biggest con or downside to buying a pre-closure through a real estate agent is the
selling price. Real estate agents take a percentage of each sale. To ensure they get a
decent paycheck, the price of the home increases. While pre-foreclosure homes, even in
these types of cases, are still cheap, you may get a better deal when buying directly
from the homeowner.

Speaking of buying directly from the homeowner, there are a number of benefits to doing so.
One of those benefits is the deal that you may be able to walk away with. At the last
minute, some homeowners will do just about anything to sell their homes before foreclosure
starts. Selling a home allows a homeowner to keep their credit in good standing. This means
that you may be able to negotiate a better deal. All that really matters is that the
mortgage lender gets their agreed upon share.

As it was previously stated, many homeowners are dealing with a wide array of emotions when
faced with foreclosure. You may see this in the form of uncertainty. A homeowner may want
to try and put-off the buying process as long as possible. Deep down, all homeowners wish
for a last minute reprieve that will allow them to keep their properties. If you want to
buy the property, make your intentions known, but do not be too pushy.

In addition to buying a for sale by owner pre-foreclosure, you may want to do a little bit
of research. There are millions of homeowners facing foreclosure. Some of those homeowners
do not know all of their options. You can approach a homeowner yourself and inquire about
buying their home. You can research foreclosure records online or in local government
offices. To get started, it is recommended that you send correspondence through the mail.
This is considered less rude and invasive. If you hear back, good. If not, you may want to
try again in another month.

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