Does management company have to honor terms of lease still in effect?

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Does management company have to honor terms of lease still in effect?

I am in the last 6 months of a 2 year lease. The property was foreclosed the end of last year and the bank hired a property management company to deal with the repairs and collect the rent. My rent was due yesterday and I forgot to drop it off. The original lease states there is a $35 late fee. 9 months ago we received a letter from the company titled “30 day notice to tenant. Change in rental terms”. This letter stated the late fee is 10% of the rent, which would be $109. Can they change these lease terms since I still have a lease and they allowed me to stay in the property.

Asked on August 6, 2011 Wisconsin

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Here is the way that the law generally works (for specifics on your state seek legal help in your area). When there is a foreclosure on a rental property, the tenant's lease is valid until the redemption period has ended.  Once the redemption period ends, the new owner (usually a bank) is not obligated to honor the terms of a lease. However, the Protecting Tenants at Foreclosure Act of 2009 (Sec. 701-704 of Title VII of Public Law 111-22; http://www.nlihc.org/doc/701-704-Public-Law-111-22.pdf)) was enacted on May 21, 2009 and immediately offers significant protection to tenants in foreclosed properties. It requires the person or entity (“successor in interest”) that acquires a rental property through foreclosure to honor the leaseof any bona fide tenant inthe property or provide 90 days notice to vacate to any bona fide tenant (this term means that the tenant is not the child, spouse or parent of the landlord, and is paying not substantially less than a fair market rent). Successors in interest are also subject to any Section 8 tenancy. This law expires at the end of 2012. In lights of the above and the facts as you have presented them, it appears that the bank did not give you the 90 days notice so instead I would assume that the lease was being honored. So the terms would remain the same and could not be changed unilaterally.  I would write to the management company and advise them of the above law and indicate that you have considered the lease ratified.  That you will abide by the terms of the original lease as to the late fee (and one day late should not be an issue; check the law in your area about that; it is generally a 5 day grace period).  Good luck.


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