Foreclosures Impact on Tenants

Statistics do not reveal the true figure of how many tenants are displaced due to the foreclosure process. Some landlords are not forthcoming and do not end up telling the tenant that they are going through foreclosure. Instead, most of them keep it a secret from their tenants and do still collect the rent. However, they do not use the rent to keep up with the mortgage payments. These shady landlords use the money for personal use and the tenant is left to face the displacement that result in foreclosure.

Foreclosed homes that are owned by real estate investors are becoming part of the inventory that the banks acquire after a public auction. However, most banks are lenient enough to give the tenants enough time to move out of the home and find new living accommodations.

Sooner or later, the tenant will find out about the pending foreclosure auction because the county sends a sheriff to the home to place a notice on the door. At this time, it can be frustrating for the tenant because now it calls for quick action to find a new place of residence, which can be quite difficult for tenants who have incurred more debts or bad credit.

The person who wins the bid at the public auction is now the new landlord and if the tenant has not yet moved out will have to contend with that person. The tenant can ask for more time to move out or work something out with the new landlord to have them stay and continue renting the home.

Some landlords will have other plans and will want the tenant to move out. There are cases where the new landlord will cut off the utilities that forces the tenant to move, but this is illegal and the tenant can seek legal advice from an attorney to remedy this matter.

New landlords that have won the foreclosure bid for the seized property will even go as far as offering the tenants money to move. This is an unethical process and the tenant should be careful before accepting money.

According to the law of the United States, a tenant cannot be physically evicted, if the lease was signed before the foreclosure judgment was served. In fact, the previous landlord should let the tenant know of the pending foreclosure before it gets to the courthouse steps.

If there is a new landlord after the foreclosure auction, the new landlord should be able to work with tenant by giving a notice to leave and time for the tenant to find a place to live. In the meantime, the new landlord can sign a month to month lease with the tenant to collect rent while the tenant looks for a new place to reside.

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