In a rent-to-own situation, what happens to the tenants in a foreclosure?

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In a rent-to-own situation, what happens to the tenants in a foreclosure?

About 5 years ago my in-laws offered to secure a mortgage for my wife and I due to our poor credit at the time. We provided the funds for the mortgage and moved onto the property, which was titled in their names. In actuality, we are tenants in our own house. Then 2 years ago we decided to take advantage of the tax rebate on home purchases and applied for our own mortgage only to find out there was a $10k lien on the property. We were unable to acquire the property and now the in-laws are in significant debt and behind on their mortgage payments. Could we be evicted from our home as tenants? Do we have protection as homeowners or as tenants?

Asked on July 11, 2011 under Real Estate Law, Ohio

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

There is a recent Federal Law that allows a tenant to stay in a property they are renting until the term of the lease is concluded provided rent is paid timely and other terms of the lease is adhered to. For example if there is eight months left on the lease, potentially you have another eight months to rent the property regardless of the foreclose.

If your rental agreement is on a month to month basis under this relatively new Federal Law, the new property owner, post foreclose has to give you at least ninety days written notice to vacate the foreclosed property assuming rent is current.  

If you are interested in purchaing the property, potentially the new owner post foreclosure would be willing to give you a good deal to purchase it. It would be to the newowner's advantage to do so in that a sale could occur sooner to you and perhaps real estate commissions could be minimzed in the sale.

Good luck.


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