If your landlord loses the home you're renting to foreclosure, federal law protects you against suddenly finding yourself evicted. In some cities, you can't be evicted because of foreclosure at all.
In others, you can usually keep your home until your lease expires. If you're renting commercial property, such as retail space, you may have a little less protection. It depends on the terms of your lease.
You Have at Least Three Months to Move
In 2009, federal law changed to protect residential renters. Unless the person who buys your home in a foreclosure sale wants to live there, the new owner must honor your lease until it expires.
A new owner who wants to live in your home must give you 90 days' notice to leave. Residents of a rent-controlled building can never be evicted because of foreclosure. Some cities have additional laws that protect you from eviction because of foreclosure.
Some Lenders Will Continue to Rent to You
If the home you are renting doesn't sell in a foreclosure sale, you might be able to renew your lease from the mortgage lender. When no one bids enough in a foreclosure auction to cover the mortgage loan, the lender keeps the house.
Some lenders, such as Fannie Mae and Freddie Mac, will consider continuing your lease. You would pay rent to them rather than to your landlord. Private lenders might consider renting to you as well, at least until they find a buyer for the home.
The New Owner Might Try to Make You Leave Sooner
A new owner who buys the home you are renting in a foreclosure sale might be eager to make you move in order to facilitate resale of the property. The new owner might even be willing to pay your moving expenses.
The choice is yours. If the new owner wants to live in your home, which means you only have 90 days anyway, you might want to accept the money and move. Speak with a lawyer and make sure you get the deal in writing.
Tenants rights in Commercial Property Foreclosure
If you're leasing retail space and your landlord's mortgage lender forecloses on the property, the lender might be able to evict you. However, if your lease includes a non-disturbance agreement, your business is safe as long as you keep paying your rent. A non-disturbance agreement is a promise from the lender that you can continue doing business from that location, even if it forecloses on the property.
A Foreclosure Lawyer Can Help
The law surrounding the rights of tenants occupying foreclosed property is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a foreclosure lawyer.