Tenants Faced with Foreclosure - An Update

FORECLOSURE TURNS LIVES UPSIDE DOWN FOR TENANTS

Hopefully we won't be reading or writing any more posts like the one I wrote in March 2008 titled Tenants Faced with Foreclosure - Lives Turned Upside Down - at least not for Maryland properties.  This is an update inspired by that post.

In addition to new federal legislation protecting tenants at foreclosure, new state legislation went into effect last month in Maryland requiring a series of notices to all occupants of residential properties at various stages of the foreclosure process.

Don't get me wrong... it will still be very disturbing to families when they find out the home they lease is being foreclosed upon - but at least they can be certain of having some advance notice to explore their options.

Disclaimer:  Before I continue, let me remind you that I am a REALTOR, not an attorney, and this should NOT be considered legal advice. It is an update to the unfortunate situation described in my earlier post, now that the Maryland Legislature has passed emergency legislation to help protect tenants in the event of foreclosure to the property they occupy.

Now tenants don't have to worry about anyone showing up at their door to say they just purchased the property at a foreclosure auction and they're O-U-T.  As of May 19, 2009, any person authorized to make a sale in any foreclosure action in Maryland must provide written notices to "ALL OCCUPANTS" at three steps during the foreclosure process:

• Notice must contain specific wording and information prescribed by law (outlined below)
  
• Notice must be in a separate document
• Notice must be in 12-point type
• Notice must be sent by first-class mail
• Notice regarding content must be on outside of the envelope, on the address side, in 12-point type, in specific wording prescribed by law.

This is the result of emergency legislation known as §7-105.9 of the Real Property Article, Annotated Code of Maryland.  The entire bill can be found online at

HERE'S WHAT TO EXPECT IF THE HOME YOU LEASE AND OCCUPY IS FORECLOSED UPON:

First notice, titled "IMPORTANT NOTICE", at the time foreclosure action is filed, shall include the following information:

1. Foreclosure action has been filed against the property (Including name and address of Circuit Court); 
2. Foreclosure sale of the property may occur after 45 days from the date of the notice;
   
3. Occupants may want to consult an attorney;
   
4. Occupants may be evicted;
   
5. Name and contact information of the person authorized to sell the property;
6. Phone number (877-775-0357) for assistance;
   
7. Website (www.mdhope.org) for information.

Notice on envelope shall read “IMPORTANT NOTICE TO ALL OCCUPANTS: FORECLOSURE INFORMATION ENCLOSED. OPEN IMMEDIATELY”.

Second Notice, titled "NOTICE OF IMPENDING FORECLOSURE SALE", not earlier than 30 days nor later than 10 days before the foreclosure sale:

1. Foreclosure action has been filed against the property (Including name and address of Circuit Court);
2. Details of foreclosure sale, including date, time and place;
3. Occupants may be evicted;
4. Name and contact information of the person authorized to sell the property;
5. Phone number (877-775-0357) for assistance;
   
6. Website (www.mdhope.org) for information.

Notice on envelope shall read “IMPORTANT NOTICE TO ALL OCCUPANTS: FORECLOSURE INFORMATION ENCLOSED. OPEN IMMEDIATELY”.

Third Notice, titled "IMPORTANT EVICTION NOTICE", after judgment awarding possession and before any attempt to execute the Writ of Possession:

1. Judgment awarding possession has been issued (Including name and address of Circuit Court);
2. Date of eviction;
3. Name, address, and telephone number of purchaser or purchaser's agent;
4. You may contact this person or review file in office of the Clerk of the Circuit Court
5. You may consult an attorney to determine your rights;
6. Phone number (877-775-0357) for assistance;
7. Website (www.mdhope.org) for information.

Notice on envelope shall read "IMPORTANT NOTICE TO ALL OCCUPANTS: EVICTION INFORMATION ENCLOSED. OPEN IMMEDIATELY.”.

NO NOTICE IS REQUIRED in the event foreclosure sale is postponed.  Additionally, neither the landlord nor the property manager are required to notify you if/when the mortgage or deed of trust is in default (unless your lease specifies otherwise), so the first notice you receive may be the one described in this post.  Frustrating as that may be for you, it is better for you now than it was for tenants faced with foreclosure in the past.  If in doubt, read Faced with Foreclosure - Lives Turned Upside Down

What are you going to do?  The tenants in my original post didn't want to disrupt their children any more than necessary, so they looked for another rental in the same school district.  Of course, renting again is an option but maybe - just maybe - this might be a good time to buy, and maybe even purchase at foreclosure the home you now lease and occupy. 

If that idea appeals to you, the first step would be to contact a mortgage lender to find out if you qualify for a loan adequate to purchase the property.  If so, contact the person named in the notice you receive or attend the foreclosure auction to make a bid (armed with financing in hand).  If you need any real estate advice, feel free to contact me, or contact a real estate attorney for legal advice.

Originally posted at Focus On Crofton 6/23/09 as How Will You Know if The Home You Lease Faces Foreclosure?

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Margaret Woda is a licensed Associate Broker in Crofton Maryland.  She specializes in serving the real estate needs of home owners and home buyers in Anne Arundel, Howard and Prince George's Counties, Maryland, including Fort Meade, Andrews AFB, and the U.S. Naval Academy.  If you enjoyed reading this post, check out Focus On Crofton and Your Online Relocation Package for Anne Arundel County.  You can contact her online or by phone at the Crofton office of Long & Foster REALTORS (410) 451-6245