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We rented a home back in Feb. 2008. A couple weeks ago a process server showed up and we found out that the property is being foreclosed on. Under the circumstance do we have a right to break our lease? I'd like to go ahead and start looking for another place if we need to. The owner has 2 other properties in foreclosure so I don't think there are any plans to get the payments up to date. We rent through a realtor to rent the home and she just keeps telling us to not worry.
Unfortunately you don't have a right to break the lease, unless you specifically put something in the lease about this situation. If you don't pay the rent the landlord does have the right to evict you. Depending on the state once the foreclosure does go through they can evict you with 30 days notice, and you have 30 days to move out. Of course that depends on the state so you should look it up. Some cities like Oakland, CA I think have more protections for tenants. It would probably be in your best interest to send certified letters to your landlord and the realtor regarding your security deposit. Technically once the foreclosure does go through, he/she has to return your security deposit to you, and the lease does not transfer to the bank. How long they have to return your deposit depends on the state, but you should probably start sending letters to them to make it clear that you expect the security deposit.
Don't just expect that the landlord has no money, they may have been pocketing the rent and not paying mortgage or taxes on the properties for some time. It is best to know your rights regarding eviction after the foreclosure does take place, some banks and their realtors might try to force you to move before the deadline illegally, they are only looking at their bottom line, and likely don't care about you or your family.
Thanks for all the information. Our realtor is really very nice and I think her intentions are good. I know she has the deposit money, not the landlord. I just get nervous, 30 days really isn't a lot of notice to move. I guess I'll just start saving money. Where is the best place to find info on the state laws? I've checked the statute but they are very vague. I wonder if the county would be of any help?
Read the lease and check the section on ownership transfer. There should be a section that transfers your rights to the new owner, no matter if it is sold or foreclosed. The lease is the key. Read it. It should transfer your lease rights and deposit and you should be Ok until the end of the lease.
In general, if you have a one year lease the lease is good for the duration of the lease no matter who owns it, whether the property is sold or whether the property is foreclosed on.
Month to month tenancy? You'd better investigate state and local landlord-tenant laws.
I can only tell you what happened to me when I went through a very similar situation.
We rented a house through a realtor also. We were on a month to month basis and a sherriff came to the house and notified me that the house was being foreclosed on and when the hearing was and everything. In our lease, the landlord (the owner) or ther renter (us) had to give a 30 day notice before moving. The Realtor contacted her lawyers (and I contacted mine) and both said that the landlords were in breach of contract the moment we got the info about the foreclosure. The homeowner tried to sell the property to other real estate places in town and they were contacting the realtor that managed our place wanting in to come in and see it. The realtor told them that they were not to bother me because the homeowners put me in a very big bind (my husband was due to come home from a 15 month deployment in about 2 months, a newborn, a 4 yr old and my closest family was 9 hours away). It was a huge mess, a very bad situation and we had to get out of it. We did get our full deposit back because the realtor kept it in one of her accounts.
Definatly check with a lawyer to make sure of your rights on everything. Another thing our lawyer advised was to clean and take pictures of everything that way if we needed it to, it would stand up in court.
I hate being told to not worry about things especially when it comes to a place over your family's head. That is one thing I worry about and will fight tooth and nail with. In a situation like this, it is something to worry about.
Best of Luck getting everything taken care of.
Normally, after the foreclosure goes through, the bank owns the property. They'll notify you with a notice. They want the property back so the bank can sell it. They may give you a monatary offer (like don't even bother to pay your last month rent). State laws vary, so I'd check the law in your state.
You may consider researching the loan to find out if it is assumable. You can probably own it for less than what you pay in rent.
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