Renters Face New Eviction Risk: Landlord Foreclosure

Renters Face

Protecting yourself from eviction seems simple. Pay your rent on time, don’t be loud or destructive, and maintain a genial relationship with your landlord, and you should be able to live happily in a rented property for years.  Theoretically, this is true.

However, there is an eviction risk many renters are unaware of or simply don’t think to consider—landlord foreclosure.  In the last year, foreclosure rates in this country have reached record highs. Nevada, Florida, California, and Arizona have been hit particularly hard by the mortgage crisis according to RealtyTrac.com data, but even states fortunate enough to avoid significant increases have suffered in comparison to data from five years ago.

Unemployment has affected everyone, and even homeowners with good credit are finding it difficult to stay up to date on mortgage payments, yet landlords are under no legal obligation to inform their tenants of an impending foreclosure.  Because of this, even the best tenants can find themselves served with an eviction notice they never saw coming.  How should you handle it if your landlord is foreclosed on, or better yet, how can you make sure this doesn’t happen to you?  A few tips:

  • Do your research.  Look into public records in your area.  Foreclosures are public record, so whether you have a registry of deeds, land record repository, or simply a local country courthouse in your area, you should be able to find a property’s history and information for free.
  • Landlords do background and credit checks on tenants, so while it may seem unorthodox, you can do the same for them—for a fee.  Many companies provide this service, and for a nominal fee, you can have the peace of mind that you won’t be served with a notice to vacate the premises you never saw coming.
  • Foreclosures occur when a bank or lender takes back ownership of a deed, so if you’re a tenant in one of these homes, get in contact with the lender.  Though it is uncommon, the lender may be willing to keep you on as a tenant.  You’ll have to sign a new lease, but that is far better than the alternative of having to find a new place to live.
  • Do not ever withhold rent as a tenant. Even if your landlord is in foreclosure, until ownership of a property is officially transferred back to the lender, the terms of your lease are still in effect, and even if the landlord is pocketing the money without paying the mortgage on the home, he still has the power to have you evicted, leaving a black mark on your credit and making it more difficult to find a rental property in the future.  The correct course of action is to continue paying rent per the terms of your lease and then sue in civil court to recoup your lost rent money and/or the security deposit.

Unfortunately, with landlord foreclosure there is no “right” answer; no happy ever after ending.   Educating and protecting yourself is the best, and really the only defense against landlord eviction. However, if you take these small precautions, if you’re ever in this unfortunate position,  you may be out, but not down.

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