Renting a Foreclosure Property? What To Do If The Lender Starts Sending Threatening Mail To The Property.

renting a foreclosureAre you renting a foreclosure property? You could be and not know it.

There is currently a pandemic of landlords renting out their properties in foreclosure litigation. Landlords do this for two reasons. The first being to offset the legal costs of foreclosure litigation. The second is to milk as much cash as possible before the lender ultimately wins. 

States like this consider this equity skimming and it’s illegal. The landlord could face up to five years in prison for each count of equity skimming. 

Most landlords are not disclosing to the tenants that the property is in foreclosure. They do this in order not scare away a potential revenue stream.

If your landlord is renting out a property already in foreclosure and didn’t tell you the property is in foreclosure, they could be in serious legal trouble. States like Florida consider this fraud and misrepresentation.

5 Tips for Tenants Renting a Foreclosure Property

Here’s what to do:

Be Proactive. 

The bank or its attorney will likely be sending you notices once they take possession of the property.

You need to contact the bank or attorney immediately if you get a notice. Also, inform them that you are living in the property and contact your landlord. In addition, ask your landlord what he is doing to prevent the foreclosure.

It’s possible your landlord will be able to avoid the foreclosure by reaching an agreement with the bank. The landlord could also be filing for bankruptcy. Ask your landlord for regular updates. You can also check public records to monitor the foreclosure process on your own.

Know Your Rights. 

Foreclosure laws vary greatly from state to state. So, it’s important to understand and enforce your rights as a tenant. These laws can help answer important questions, including:

  • Are there any specific protections for you as a tenant living in a foreclosure property?
  • What is the process for foreclosure and how long will it take?
  • How much time do you have to move out after the foreclosure is completed?

Some states have “just cause” laws that limit the reasons a tenant can be evicted. Sometimes, the foreclosure alone is not a just cause. You should contact an attorney to help you understand and enforce your rights.

Follow Your Lease. 

Your lease is still valid and enforceable until your landlord loses the property in foreclosure. You are entitled to remain in the property during the foreclosure process as long as you comply with your lease agreement. If you fail to pay rent or breach the lease, your landlord has the right to file an eviction.

Most state laws require a landlord to continue following the lease even during a foreclosure. You can file legal action against your landlord they breaches the lease.

Keep in mind, a foreclosure sale automatically wipes out the rights of third parties in the property.

Be Prepared. 

Once the property is foreclosed on and the transfer of ownership is complete, you will likely be required to move. A foreclosure ruling will generally terminate your lease regardless of it’s expiration. Fortunately, you don’t have to leave immediately. The length of time you have to move will vary depending on your state’s laws, but is usually somewhere between 30 to 90 days. The earlier you start looking for a new place to live, the smoother the transition is likely to be for you.

It’s possible that the new owner might offer you money to move out early. Lenders usually refer to this as “cash for keys.”

You can agree to move out early in exchange for money. However, be sure to get the agreement in writing. 

Get Help. 

Foreclosure can be a frustrating and stressful experience for tenants as well as homeowners. Following the steps outlined in this article can help, however the best course of action will vary depending on your specific circumstances. Contact an attorney licensed in your state to help you understand and enforce your rights.

Read More About Foreclosures On MFI-Miami

 

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