When a non-owner occupied (rental) home is sold or goes back to the lender, the tenant may be left out of the loop until the home’s ownership is about to change. If there is a legally binding lease in place it must be honored. However, often the original lease term has expired and has not been properly renewed. In other cases, the parties have chosen to rent month-to-month for accentuating circumstances. Tenants not protected by a long-term lease essentially “lose their home” and are served with a notice to move.
Here are some things that you should know:
• Deferred Maintenance or Repair Requests Unanswered: An owner that is considering a sale or turning the property back to the lender may delay normal property maintenance or not make requested repairs. If you have concerns, you may request evidence that mortgage obligations are current.
• Security Deposit: You should require that the security deposit be held separate from the rent you pay. The former owner may be required to return the security deposit to you if you were forced to move due to sale or foreclosure.
• Keep paying your rent: You are still obligated to pay your rent. Don’t risk your credit rating or an eviction. You should be able to document the record of your payments during the lease.
• Notice to Residents of Impending Sale or Foreclosure: The agency conducting a sale or foreclosure will normally mail and post a notice at the property. Be pro-active to make sure your expectations and desires are clearly known so your concerns can be addressed as the transaction proceeds.
• Contact the New Owner: Sometimes the new owners are willing to allow tenants to continue living at the property under a new lease agreement. Bank-owned properties generally will evict the tenants of a rental home unless you can show a benefit to continue.
• Cash for Keys: Some banks are willing to pay residents to move early or leave the property in good condition. If you are not offered this, ask. Be aware that this may require you to move quickly.