If I received notice that my rental has been taken over in a foreclosure, do I legally still have to pay my landlord rent?

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If I received notice that my rental has been taken over in a foreclosure, do I legally still have to pay my landlord rent?

I received a notice from a company saying that they now own the property and to call them in 24 hours or they will enter an eviction. We called and they said, we could either move now and possibly get a cash for keys incentive. (They didn’t know how much at that time.) Or we could stay for a month or 2 (once again not specific). So we thought about it for a week or so and looked at some rentals nearby. Now the landlord (who doesn’t own the house anymore) comes over demanding rent. I said not until we talk to someone about what to do. So he gave us a 7 day eviction note and a threatening note.

Asked on August 7, 2010 under Real Estate Law, Michigan

Answers:

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

Answered 10 years ago | Contributor

Hummm.  This all sounds like it needs to be straightened out.  If the property has been foreclosed upon then the rent needs to be paid to the new owner.  New owners in a foreclosure may or may not have to honor the rental agreement.  That depends on state laws.  Generally they do not and can indeed start eviction proceeding.  But here the old landlord is doing same with the 7 day notice so it makes me wonder if this is a scam as to the foreclosure.  If the landlord brings the eviction and he does not have "standing" meaning the right to do so as he is not the owner of the property, the matter will be dismissed.  But you need to figure out what is going on and get any deals in writing.  You should have gotten some notice of the foreclosure before this.  You can go down to court and check in the foreclosure part in the county in which the property is located to see what is really happening. And you can start your owner landlord tenant proceeding to pay the rent in to court for the time being.  Good luck. 

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You should speak with an attorney to help you untangle this situation. Here's some background for your benefit:

1) Once a property has been sold in foreclosure, the former landlord no longer owns it. No longer owning it, he cannot give you possession, or the right to stay there. Since he cannot give you that right, you would not owe him rent--IF the foreclosure sale has gone through. You would still owe any unpaid back rent, however.

2) The new owner could previously simply have evicted you--you don't have a lease with the owner--or could strike any sort of new deal or arrangement with you, from letting you stay for awhile for free while you move out, renting to you month to month, signing a new lease, etc.--whatever you and the new owner agreed to.

3) About a year, year-and-half ago, a federal law was signed which complicates this, however. Called, I believe, the "Saving our Homes Act" (or something similar), it prevents residential tentants from being immediately evicted in many cases in foreclosures. There are many complications to the law, depending on such matters as how long had been left on your lease, whether the new owners intend to move into your unit themselves, etc., and is something to discuss with an attorney to see how it applies to your situation. The short answer is, in most cases, a residential tenant will get at least 90 days post-foreclosure, and may get more.


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