What are a tenant’s rights in a foreclosure?

My friend lived in a house for 11 months at 10 months discovered the house was going to foreclose. She called the leasing company and let them know and also told them she would look for another home. She found the home and moved in November 1st. The auction date on the foreclosure was postponed 1 month and the leasing company is saying since the house still belongs to the owner and she didn’t submit the request in writing they are keeping her deposit sum of one month’s rent and taking her to collections for the last month’s rent. She asked if the deposit could be applied to the last month and they said no. My friend has 4 kids one of whom is recovering from brain cancer. Can they really do this??

Asked on November 11, 2011 under Real Estate Law, Tennessee


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

There is a federal law that was passed in 2010 stating that a tenant in a residential unit who occupies a home in foreclosure has the ability to remain in it after the foreclosure for the full term of the lease if the lease is not a month-to-month assuming rent is being paid.

If the rental is a month-to-month lease, the new owner has to give the paying tenant at least 90 days notice for a move out.

As to the problem that you friend is writing about, she needs to carefully read the written lease to see if the home's foreclosure is a breach of the rental agreement allowing the end of the lease and whether she needed to give written notice or oral notice to end the lease.

If her rental payments are not being made to the lender for the unit that is in foreclosure, the landlord can be guilty of "rent skimming".

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