Foreclosure: Your Options As a Renter

Although many renters are blindsided by a foreclosure eviction notice, others may have seen the signs coming.  Whichever side of the fence you are on, it is important to know what your options are.

One of the most common decisions made by renters who have either been served with a foreclosure notice or see it coming is to throw in the towel and move.  Many decide this is the safest and easiest approach to take.  With that said, know that you may face a number of obstacles.  Unless your landlord has received a foreclosure notice, they do not need to let you out of your lease.  If this happens, you legally need to continue paying rent.  

Next, you may find it difficult or impossible to retrieve your security deposit.  This may be a problem if you weren’t anticipating to move, as you may not have the funds needed to pay a new security deposit on a new property.  This doesn’t mean that you will be left homeless or put out on the street.  Remember that you don’t have to move until you receive a legal eviction notice.  Next, talk to prospective landlords about your situation.  If your current landlord can vouch that you do make on time payments, you may be able to make your security deposit in affordable installments.

As previously stated, you do not legally have to move from your rental unit until you have received an eviction notice.  For that reason, many renters, especially those who were unprepared, make the decision to stay and stand their ground.  If you want to do this, know that you may face some resistance from the bank or new property owner.  With that said, until you receive an eviction notice, you cannot be forcefully removed from the property, your utilities cannot be shut off, and the locks cannot be changed on you.

Another option that you have is to approach the financial lender in question.  Your best luck is when dealing with either a locally owned or operated bank.  When dong so, you will have two different options.  Ask to stay in the home or rental unit.  Unfortunately, some banks will automatically start the eviction process as soon as a property enters into foreclosure.  This is party due to fear that the property will not promptly sell.  Many banks don’t want the hassle or liability of having to deal with a renter.  If you are a long-term renter, plead your case, which should include prompt and on time rent payments.

Next, you can offer to buy the property.  Even if you aren’t in the best financial standing or if you are unprepared to make the often required down payment, the lender may be willing to work with you. Once again, your chances improve when dealing with a locally owned or operated bank.  If you are a long-term renter and can prove that you have made consistent on time rent payments, have the money needed to pay for a mortgage or home loan, the lender in question may be able to work with you.  After all, they want to sell the property and recoup their lost money as quickly as possible.

Although some banks will start the eviction process right away, others will not.  This is normally when they believe they can sell the home quickly, like in an auction.  If this occurs, you may want to wait and workout an agreement with the new owner.  If you are in an apartment complex or a multi-family home, your chances of being able to stay are pretty good.  However, if you rent a single family home, the new buyer may intend to move him or herself in.

As an important reminder, you can always throw in the towel and start preparing to move when your rental unit is facing foreclosure, but you don’t have to.  As a renter, you have a number of legal rights, as well as options.

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