Things Clients Should Know - Protecting Tenants in Foreclosures
What happens if you are renting your house or apartment and your landlord loses the property through a foreclosure sale? A federal law passed in 2009 provides some protection to you.
In the foreclosure of residential property after May 20, 2009, the purchaser at the foreclosure sale takes title subject to the right of the tenant to keep renting the property until the end of the term of the lease or ninety days after written notice, whichever period is longer. However, if the property is sold to a buyer who will occupy the property as a the buyer's primary residence, the lease may be terminated on ninety days written notice even if the length of time left on the lease is longer.
In order for a tenant to benefit from this law, there must be a bona fide lease. A bona fide lease is one in which the tenant is not closely related to the defaulting landlord, the lease was the result of an arms-length negotiation and the rent is at fair market value or is not substantially less than fair market value.
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