One misunderstanding about the housing crisis is that many people think that only homeowners have been hit. In truth, up to 40% of people who have lost their places are probably from rented units or houses, if we are to believe that figure from the National Low Income Housing Coalition (NIHLC). Rental foreclosures leave many tenants afraid. This is because even if you pay your rent or have a security deposit, a foreclosure still means you have to leave.
Protecting Tenants at Foreclosure Act
The Protecting Tenants at Foreclosure Act was approved with the idea that tenants of a foreclosed property should have enough time to find a new place to live. The law will be valid until December 31, 2012.
Here are some details that you may find useful in terms of foreclosure relief:
You must be true tenant or renter to qualify for these foreclosure relief actions. You must qualify for all three of the following guidelines to be legally considered as a tenant or renter.
- You can’t be the former owner, the former owner’s spouse, child or parent.
- The lease terms should be at arm’s length for both owner and tenant.
- Unless the tenant is receiving government assistance, the rent cannot be considerably less than the fair-market price.
The second and third guidelines are used to prevent deals where the former owner will try to ensure that the tenant can avoid eviction.
Your lease can be valid even if the foreclosed property has been bought by someone else. Subject to certain qualifications, your lease may still be binding if you signed it before the owner got the original foreclosed loan. Find out if this option is open to you by contacting housing counselors or non-profit advisers.
Tenants have 90 day’s notice at the very least. As long as no one is buying the foreclosed rental property, renters can stay as long as is specified in the lease. However, if the property is bought with the intent of being converted into a private residence, the tenants will have a full 90 days to vacate the unit or house.
If you don’t have a lease, you still have 90 days to vacate the premises. Even if you had a “handshake deal” with the former owner, you will still be given the normal leeway so you can find a new place to live.
You can sue the former owner for breach of contract. Depending on the situation, you can sue the former landlord for your broken lease. You can use this to finance your moving into another rental unit or house. As always, go to a qualified advisor before you try this.
Local laws apply. This new law cannot affect state or local laws that pertain to your situation, if those laws provide longer terms for specific details and has additional tenant protections.
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