What happens to tenants during a foreclosure?
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What happens to tenants during a foreclosure?
I’m currently renting a house in NV and the owner of the house lives in NJ. Anyway, to make a long story short, I’ve been getting letters from the bank saying that the house is being foreclosed on. So I contacted the owner and he said that his taking care of it, but I came to find out that he hasn’t paid the bank for 5 months because he’s applying for modification review, which is fine, but he hasn’t told the bank that he is renting it and told us if they call to say were his family. Now, we have a lease until January but were afraid to show up 1 day and the house is locked and we ca’nt get our stuff because this man didn’t tell the bank he is renting to us. Now if we break the lease can are credit be ruined even if the lease wasn’t honored by the bank?
Asked on July 6, 2011 under Real Estate Law, Nevada
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Federal law requires that when a home goes into foreclosure, tenants who have a written lease can continue to occupy the home until the longer of: the end of the lease period or 90 days. However an exception is made if the new owner intends to move in and occupy the home as their primary residence. In that event, a 90 day notice to move would apply. Additionally, the laws of some states provide even more protection.
Until the property title passes the lanlord is still the owner so your obligation to pay rent contiunues, whther or not your lanlord is paying the mortgage. The bank will inform you when the properety is sold or otherwise transferred. After this time, the landlord will no longer be the legal owner, so they will not be entitled to any longer collect rent from you (you will be informed by the bank where to send your rental payments).
As for your credit, your lease is still in effect until there is a new owner, so you could ne sued if you break your lease. And such a suit will be noted on your credit report.
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