What Happens If The Home I’m Renting Is In Foreclosure?
If you are renting a home and discover the home is now in foreclosure, is there anything you can do? Well, the first and most important thing is to make sure you are informed of the time line for the foreclosure so that you can plan ahead. Since you do not own the property, there is not much you can do to save it.
If the home is still owned by the owner of the home, continue to pay the rent to the landlord. In case your landlord is able to prevent the home from foreclosing, you will have to honor your contract with them. If you decide not to pay rent, the usual contractual rules apply and you could receive an eviction notice or be sued for the rent owed.
Once the property has been sold either through short sale or REO sale auction, the home will no longer belong to your landlord. There are times when the new owner will grant existing tenants the right to stay in the home and continue to rent to them.
Most states have regulations to allow renters to have a redemption period of up to one year. You may remain in the home during the period, unless the landlord decides to take possession back.
Depending on local state laws, if there is a new owner, some states only have to give 30 days notice of eviction before taking possession of the property. Under a foreclosure, all leases are considered null and void. There is only a very small amount of cases where the new owner has been forced to let the lease expire before the eviction.
If your budget allows, you can even offer to purchase the home from the owner. It is better for them in the long run to sell through a short sale even for less than what the house is worth, than have it foreclosed. Lenders may be willing to agree to this as they will still get partial payment for their loan and you might get a good deal as well.
Banks may also come to you and offer you what is known as "a keys for cash offer". They will give you a sum of money to vacate the home, usually within 30 days and some better ones might even help you to move to another property. The fact is renters don't have many rights in a foreclosure setting.
New owners and banks only have to give you 30 days notice to leave, so it's a wise idea to find a new home as soon as possible.
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