What should I do if the house or apartment I’m renting goes into foreclosure?
If your landlord stops paying the mortgage, foreclosure proceedings may begin. Some state and local laws may offer protections for renters in the foreclosure process. More information about landlord-tenant laws in your state is available here and a summary of state and local tenant protections from foreclosure is available here.
You may want to consult an attorney about your rights. If you need help finding an attorney, you can view this list of resources from the American Bar Association and you can find your local legal aid office or volunteer attorney program here.
Be aware of the following:
- Look for notices. If notices of a possible foreclosure are delivered to or posted on your property, contact the sender right away and let them know that you are a tenant. You should also contact your landlord.
- Ask questions. You may get confusing information from your landlord about the foreclosure. For example, the landlord may ask you to prepay your rent in violation of your lease or rental agreement. Your landlord may also tell you that the foreclosure is a “mistake,” or say that the problem has been resolved. To be sure, check with the office where deeds are recorded in the county where the property is located. “Land records,” “auditor,” “recorder” or “assessor” are names commonly used to describe the office where a foreclosure notice or other document (often called a “lis pendens”) has been recorded. You may also want to check court filings against your landlord.
- Know Your Rights. During the foreclosure process, you need to know what your options are under your state and local laws. They can vary greatly from state to state. In order to decide what to do, you may want to know:
- How long the foreclosure may take;
- How much time you have to move after a foreclosure sale;
- If there are any other specific tenant protections in your state.
You may be able to get some of this information by calling the local courthouse.
- Rent control/Just cause eviction and Section 8. If your state or local laws have rent control or “just cause eviction” requirements, you may be protected from eviction after foreclosure. “Just cause” laws limit the reasons a landlord can terminate a lease or evict a tenant. Depending on the state or local law, the foreclosure alone may not justify an eviction or termination of your lease or rental agreement. If you have a Section 8 Voucher, contact your local Housing Authority and a legal aid lawyer immediately. Usually, Section 8 leases can only be terminated for good cause, which means that you can’t be evicted just because of a foreclosure. But you may need a lawyer to protect your rights.
- Utility shut-offs. If your landlord is unable to pay the mortgage, the landlord may also not be paying the utilities, and your utility service may be shut-off. You should immediately contact the utility and the landlord if a shut-off notice is sent or if your utilities are shut off. You may be able to avoid the shut-off by contacting the utility and directly paying them, even if the utilities are in the landlord’s name.
- Move. Once a foreclosure sale occurs, you may be required to move, often in as little as thirty days or less. You should remove all of your belongings when you move so the new property owner does not take or destroy them.
- Protect yourself. If someone contacts you claiming to be the new property owner, ask to see documents that show ownership. Do this before paying rent, signing a new lease agreement, or allowing them to come inside the property. Scammers review publicly available foreclosure recordings and may contact tenants living in foreclosed properties to falsely demand rent.
- Negotiate. If the new owner wants you to move out, ask if they will give you some money to help pay moving expenses. This is sometimes referred to as a “cash for keys” agreement. Sometimes the bank or the new owner after a foreclosure sale is willing to do this.
- Deposits. If your landlord was not paying the mortgage, it may be difficult for you to get back any money you paid to your landlord as a deposit or prepaid rent. If the landlord did not refund your deposit or transfer it to the new owner after the foreclosure sale, you may need to take legal action to get back your deposit.
Ask CFPB provides general consumer information. It is not legal advice or regulatory guidance. The CFPB updates this information periodically.
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