Does a bank require that a landlord live in newly purchased forclosed home?

My husband and I are renting a home which was recently purchased by our landlord. The house has been vacant for some time and we have already signed the contract and expected to move in a week. Our landlord has now approached us saying that the mortgage company he received the loan from requires him to live in the home for at least 6 months to a year. Is this true? Does our landlord have to live there before being able to rent the home?

Asked on May 22, 2016 under Real Estate Law, Maryland


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

A bank *can* require this--it's not a legal obligation, but banks are allowed to put restrictions or conditions on their loans, since ultimately, it is voluntary on the part of banks to make loans; that is, the bank freely chooses to make loans (they don't have to) and so can choose the conditions for the loan. Banks do give often different loans for a primary residence vs an investment prperty, and the primary residence loans are often more favorable--your landlord could have applied for a primary residence loan, which would require that he actually use it as a residence, at least for some period of time.
If you have a signed lease however, the landlord would be in breach of lease if he removes you to use the home as a primary residence, and you could sue him for compensation, such as any additional costs you incur due to this.

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