IfI sign a residential lease and the property goes into foreclosure, canI be evicted before the term of the lease is up?

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IfI sign a residential lease and the property goes into foreclosure, canI be evicted before the term of the lease is up?

How would the the Protecting Tenants at Foreclosure Act of 2009 effect this? What if the lease has a subordination of lease clause?

Asked on April 21, 2011 under Real Estate Law, Florida

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A lease subordination clause basically gives the lender the right to evict tenants on the property in the event of a foreclosure.  The clause does not kick in until such time that the mortgage holder acquires title to the property. Generally, this happens after the property has been auctioned at the county courthouse. 

However, pursuant to the Protecting Tenants in Foreclosure Act, tenants are given protection protection to a tenant in the event that their rental unit is foreclosed upon. The Act requires that when a home goes into foreclosure, tenants who have a written lease can continue to occupy the home until the end of the lease period, or 90 days, whichever is longer. The only exception would be if the new owner intends to move in and occupy the home as their primary residence. In that case, a 90 day notice to move would apply. Those tenants with a month-to-month lease, or no lease at all, have to be given at least 90 days notice to move. Additionally, in cases where state law provides more protection than the federal law, the state law applies.

You should be aware however, even if a foreclosure action has already been filed, as long as the landlord remains the owner of record that (is still on the title to the property), it must continue to pay rent to their lanlord.  As a lawful occupant of a property in foreclosure, a tenant should be notified by the mortgage lender as to the sale/transfer date of the property.  After this time, the landlord will no longer be the legal owner. A tenant should then be informed where to send their rental payments by the new owner.

One bright spot in all of this is that sometimes an incentive can be negotiated between a new owner and a tenant so that the tenant agrees to move out prior to the end of their lease, or 90, which ever applies.  This incentive is known as “Cash for Keys”. Basically, the owner will pay a tenant to leave the property early in exchange for a cash payment.  The amount and timing of the payment can be worked out on a case-by-case basis.


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