Renters: Know Your Foreclosure Rightsby Tim Manni
If you are a renter, it’s important to know that you have rights when or if the property you are living in is foreclosed upon. Despite Federal legislation passed back in May of 2009 that defined renters’ rights during a foreclosure, many states and municipalities are failing to provide renters with adequate information that outlines their options.
“Protecting Tenants at Foreclosure Act of 2009” (title VII, sections 702-704) states that tenants have at least 90 days to vacate the property, a transitional period many renters are still not being provided. “If a state offers greater protections to renters, the new law allows the stronger protections to apply,” says www.consumer-action.org. ‘Protecting Tenants’ is effective until December 31, 2012.
Many experts will tell you that the majority of foreclosed rental properties weren’t the result of renters not paying their bills, it was from property owners not paying their mortgage (and it has been this way for some time).
Why the rush? Nolo.com — a website that makes “America’s legal system accessible to everyone” — says lenders would likely benefit from keeping tenants in the property as long as possible:
New owners may want to terminate existing tenants because they believe that vacant properties are easier to sell. Common sense suggests otherwise. In many situations a building full of stable, rent-paying tenants will be more valuable (and command a higher price) than an empty building. Emptied buildings are also prone to vandalism and other deterioration — after all, no one is on site to monitor their condition. When entire neighborhoods become a wasteland of empty foreclosed multifamily buildings, their value drops even further. It’s hard to understand why new owners choose to pay lawyers to start eviction procedures instead of paying a modest fee to a management company to collect rent and manage the property while they wait to sell.
For more information, the National Low Income Housing Coalition has additional resources available to foreclosed renters, such as a toolkit, webinar, as well as specific news and information designated for each state.
(hat tip: Jamie Smith Hopkins @ the Baltimore Sun)