What to do if I’m renting property from someone, and the other day in the mail I received a letter stating the home is in foreclosure?

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What to do if I’m renting property from someone, and the other day in the mail I received a letter stating the home is in foreclosure?

As the renter, what should I do and what rights do I have? The renter knew this home was in foreclosure because I just signed my lease less than 2 months ago.

Asked on December 24, 2012 under Real Estate Law, Georgia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

1) Unless you successfully rescind the lease and get out of it (see #2 below), you must still pay rent until the foreclosure actually occurs; until that point, your landlord is still the owner and is therefore still your landlord. If you fail to pay rent, you can be evicted and sued for the rent you'd owe for the remainder of the lease term.

2) If the landlord knew of the foreclosure prior to your signing the lease and failed to disclose that fact, he may have committed fraud: fraud is the knowing or intentional misrepresentation of a material, or important fact, made to induce someone to enter into a transaction. If he did know, that may given you grounds to rescind the lease and escape it, if you would prefer to move. If you wish to explore this option, consult with a landlord-tenant attorney, who can evaluate the circumstances and your rights in detail.

3) Once the foreclosure occurs, your landlord is no longer the owner or landlord and you do not have to pay him rent.

4) When someone (including potentially the lender/bank) buys the home in the foreclosure sale:

a) They could continue renting to you, and if you want to keep renting, you should approach them about this.

b) If they want to terminate your tenancy, if you have a written lease and they have bought the property not to live in themselves, you should have the shorter of either the remaining time on your lease or 90 days.

c) If they want to live in the home themselves, or if you are a month-to-month tenant, you should have 90 days.

d) You would be able to move out without penalty after the foreclosure, unless you start renting from the new owner.


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