Tips for Renters Caught in Foreclosure
The foreclosure crisis hasn't just affected owners. Renters can get caught in the crossfire as well.
The foreclosure crisis didn’t just affect homeowners. Renters living in properties undergoing foreclosure have problems as well. If you are living in a property going through foreclosure, you likely have a number of questions regarding your rights as a renter. Learning these rights will help put your mind at ease when your landlord is being foreclosed upon.
First in Time, First in Right
There is one main right you should be aware of. This is the “first in time, first in right” rule. This means if the lease is in place before the mortgage, the lease takes primacy. If the mortgage is in place before the lease, the mortgage takes primacy. When the lease takes primacy it holds no matter who purchases the property.
Strategies to Remain in Your Apartment
If you are unprotected by the “first in time, first in right” rule, there are other options at your disposal.
- Begin by contacting the property’s new owner. Remember that reliable, paying tenants are a landlord’s biggest assets. Even if the landlord is in foreclosure, you may find that he has no intention of trying to remove you from the property.
- Inquire if your lease includes any provisions that allow you to act as a substitute landlord in the event of foreclosure. When the new owner takes possession of the building he may wish to keep the same arrangement in place.
- If the new landlord will not keep the former lease in place, you still may be able to negotiate favorable terms.
Other Tips for Tenants
Many of the things that you should do if your apartment building is being foreclosed upon are just common sense. They are things that you should do regardless, however the foreclosure situation makes them even more important. If your landlord is going through foreclosure make sure to:
- Pay your rent on time. Making sure that your rent gets in every month on time will give you stronger legal ground to stand on -- not to mention being the best recommendation a new owner can have for you.
- Maintain apartment-related records. Make sure to have a copy of your lease, receipts for rent paid and even utilities. Keep cancelled checks for these expenses as well. The more paper trail you have the better.
- Open all your mail. When a landlord is going through foreclosure it is not uncommon to see letters addressed to “Occupant,” as the landlord’s bank probably doesn’t know your name.
Once the foreclosure is through finished there are some things for you to keep in mind to protect yourself. These are especially important when the landlord has not kept you abreast of developments in his foreclosure case.
- If the sheriff comes to your apartment with eviction papers you should provide proof of identification. This will let the sheriff know that you are not the owner of the apartment.
- Get a lawyer. You want to avoid having an eviction on your rental history, particularly through no fault of your own. There are a number of legal aid organizations and lawyers who work on contingency. This means that you only have to pay if you win your case.
Foreclosure and You
Foreclosure is a stressful process, even when you aren’t the one losing your property. However, if you maintain a clear picture of your goals and work through the right channels, the process can be far less stressful. Make sure to look into any local or state renter’s rights laws that may apply in your situation. Some states and municipalities offer broader protections for renters caught in foreclosure.