Down here in South Florida, the demand for rentals has shot up drastically, and so have the rental prices. Part of the reason why rentals have become so popular is because many former homeowners now have a short sale or a foreclosure on their record, and so they must wait a minimum of 4 years (in most cases) before qualifying for loan to purchase a new home. Many landlords are also homeowners who are in foreclosure, and that brings up the question of: what happens if you're renting a property that goes into foreclosure?
A local attorney, Peter Sobota, answered this question in our local news magazine, DRW. According to Mr. Sobota, because the lender's interest in the property is greater than the renter's interest, under basic property law, the sheriff can come and serve you with a writ of eviction at any point. Fortunately, Congress passed the Protecting Tenants at Foreclosure Act in May 2009, which gives tenants a minimum of 90 days written notice before being evicted as a result of a foreclosure. If the tenant entered the lease pior to the foreclosure action, the tenant can stay in the property for the remainder of their lease term, as long as the new owner is an investor not planning to make that property their primary residence.
I know that this Act has helped a lot of tenants by giving them enough notice to find a new place and move out, but the Act is set to expire on December 31, 2012. Unless Congress extends this Act, there may be a whole lot of surprised renters getting knocks on their doors from the sheriff. Mr. Sobota highly recommends that before you enter into a lease agreement, hire an attorney to research the landlord and the property to make sure that there are no legal actions pending, and I very much agree with him.
Yes, hiring an attorney may cost you a bit, but you'll be avoiding a very large headache later on, and that's worth it.