It is very confusing for tenants when they learn that the property they are renting is being foreclosed on. They do not know who is entitled to receive the rent money. Often, tenants may possibly hear demands from different people; a bank, a management agency, or the desperate landlord. In this situation, it is critical for the tenant to know who is and who isn’t authorized to collect the rent payment and who is duty-bound to maintain the lease during this specific period of time.
Under federal law, if you are on a rental agreement for a particular period of time the agreement should also be turned over as is to the new owner, if the new landlord will not use said property as their primary abode. If this is so, a 90 day notice is required to be given to the current occupant of the property. Also, any change in the terms and conditions of the existing lease agreement should be approved by both parties. Otherwise, there should be no changes. Further, some state laws permit the new landlord to ask current tenants to sign a new lease contract if they decide to stay in the rented unit.
If the landlords are using state law, they may not have to accept tenant’s lease, and could have the authority to give existing tenants 60 days’ notice to give up the property. If the tenant has already paid the last month’s rent under the law; the previous landlord should refund the paid rental and deposit back to the existing tenant or transfer the paid deposit to the new landlord or owner of the unit. If in case the old owner failed to do so, he or she is liable for twice the amount of deposit or payment, attorney’s fees, or arbitration costs to the existing tenant.
It is the duty of the new owner of the property to contact current tenants and tell them where they can pay the rent. However, it is a possibility that the new landlord may not contact you about your lease after the foreclosure sale. Even though the law requires the new owners of foreclosed property notify current tenants, they don’t usually do so. The best thing for the current tenants to do when the new property owner is not contacting them and they have no way of locating them is to save and keep the rent money in a separate account.
It is not necessary for current tenants of foreclosed property to vacate their unit immediately. The new owner of the foreclosed property may not want the current tenants vacate the property. They may want existing tenants to keep the property and continue the lease. In this case, the new owner should contact current tenants and provide the new address where to send the rent money. Mutual agreement between the new owner and the current tenant is required to make any changes in the existing lease contract. It is also mandatory for trustees or banks to inform parties within 90 days in writing if the property is being foreclosed on.