Foreclosure in Austin>Question Details

Rae, Renter in Austin, TX

I just found out that the house I am renting was foreclosed on and the new owner wants me to move out. What are my rights?

Asked by Rae, Austin, TX Wed Feb 2, 2011

Lease runs through mid-July.

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Dear Rae,

Before May of 2009 your situation would have been all to common and a real problem for you. Fortunately there have been changes in law. I'm quoting here from nolo.com which is a legal dictionary....

Renters in Foreclosed Properties No Longer Lose Their Leases

Before May 20, 2009, most renters lost their leases upon foreclosure. The rule in most states was that if the mortgage was recorded before the lease was signed, a foreclosure wiped out the lease (this rule is known as "first in time, first in right"). Because most leases last no longer than a year, it was all too common for the mortgage to predate the lease and destroy it upon foreclosure.

These rules changed dramatically on May 20, 2009, when President Obama signed the "Protecting Tenants at Foreclosure Act of 2009." This legislation provided that leases would survive a foreclosure -- meaning the tenant could stay at least until the end of the lease, and that month-to-month tenants would be entitled to 90 days' notice before having to move out (this notice period is longer than any state's non-foreclosure notice period, a real boon to tenants).

An exception was carved out for the buyer who intends to live on the property -- this buyer may terminate a lease with 90 days' notice. Importantly, the law provides that any state legislation that is more generous to tenants will not be preempted by the federal law. These protections apply to Section 8 tenants, too.

Hope this helps! Chris
3 votes Thank Flag Link Wed Feb 2, 2011
Before May 20, 2009, most renters lost their leases upon foreclosure. The rule in most states was that if the mortgage was recorded before the lease was signed, a foreclosure wiped out the lease (this rule is known as "first in time, first in right"). Because most leases last no longer than a year, it was all too common for the mortgage to predate the lease and destroy it upon foreclosure.
These rules changed dramatically on May 20, 2009, when President Obama signed the "Protecting Tenants at Foreclosure Act of 2009." This legislation provided that leases would survive a foreclosure -- meaning the tenant could stay at least until the end of the lease, and that month-to-month tenants would be entitled to 90 days' notice before having to move out (this notice period is longer than any state's non-foreclosure notice period, a real boon to tenants).
An exception was carved out for the buyer who intends to live on the property -- this buyer may terminate a lease with 90 days' notice. Importantly, the law provides that any state legislation that is more generous to tenants will not be preempted by the federal law. These protections apply to Section 8 tenants, too.
Importantly, tenants who live in cities with rent control "just cause" eviction protection are also protected from terminations at the hands of an acquiring bank or new owner. These tenants can rely on their ordinance's list of allowable, or "just causes," for termination. Because a change of ownership, without more, does not justify a termination, the fact that the change occurred through foreclosure will not justify a termination.Thanks to the 2009 federal legislation, most tenants with leases will keep their leases, and month-to-month tenants will have at least 90 days to relocate. Tenants with leases have no legal recourse against their former landlords, because they are in the same position vis a vis the new owner as they were with the old: The lease survives and ends as it would had there been no foreclosure. Similarly, month-to-month tenants always know that they can be terminated with proper notice, and 90 days is longer than any state's termination period.
However, a lease-holding tenant whose rental has been bought by a buyer who wants to move in to the property ends up less fortunate than before the foreclosure -- he may lose his lease with 90 days' notice, a result that probably would not have happened had the owner simply sold the property to a buyer who intended to occupy the property. (Normally, the new owner has to wait until the lease ends, absent a lease clause providing for termination upon sale, though such clauses may not be legal in all situations.)

Thanks to NOLO
4 votes Thank Flag Link Wed Feb 2, 2011
You'll need to call the Austin Tenants Council and consult with someone there to get the best answer. Most likely, you may be looking for a new place to live. Sorry for the bad news.
1 vote Thank Flag Link Wed Feb 2, 2011
Hi, Rae.
Is the new owner a bank, or an individual who purchased the property at auction? Regardless, you should hold tight and consult an attorney. Very likely you have rights to the property through the duration of the lease, as it is a valid contract. My advice is to expect the best but plan for the worst - have a backup plan in place, like a new place to move.

Good luck!
1 vote Thank Flag Link Wed Feb 2, 2011
Rae,

You should seek the advice of an attorney, there are a number of sources for free services, especially for tenants. The "Austin Tenants' Council" is your best source.

That said (I am not an attorney and this is not legal advice - don't you love this situation where we just want to give advice without any legal ramifications?), Texas has a law that was enacted specifically because of the increase in foreclosures. It says specifically that the new owner has to give you 90 days written notice to vacate. This puts you in a good position to negotiate a shorter time period if you can find alternative living arrangements sooner than 90 days, but you don't have to. If you can move in less than 90-days, then counter the new owner's request and ask for money to move out sooner. Depending on who the owner is, they may be willing to negotiate, especially if the new owner is trying to occupy the home as their own residence, or they are trying to flip the house and get it back on the market.

To them, time is money, and probably worth more to them to get you out early, than the cost for you to move out early. See the web reference to this message for advice from the Tenants' council. You are in the driver seat, keep control of the situation!

Best of luck,

Jeffrey
1 vote Thank Flag Link Wed Feb 2, 2011
WHAT ARE MY RIGHTS DO THEY PAY ME TO MOYE OUT
0 votes Thank Flag Link Wed Jan 23, 2013
Hello Rae. You question is too plain for anyone on this site to intelligently offer you any factual information. You did not say if the lease was in effect before the owner received written notice of the default. This is very important because the Protecting Tenants at Foreclosure Act, only applies to you if your lease was issued before the notice of default was filed. This is expressed in 701.2a of the act, which states, "bonafide lease entered into before the notice of foreclosure". You can review the full act here, http://www.nlihc.org/doc/701-704-Public-Law-111-22.pdf. Therefore your lease is voided if it was signed after the filed notice of default.

We have no idea if your rent payments is current. If your rental payment is in default the Act also does not apply to you, also under California Law if your payments is delinquent you can be evicted with a 30 day notice.

To determine your rights you should present some more facts to the site and at that time determine if the lease was issued before the notice of default was filed. You can locate that information in public records or here, http://foreclosurecourt.org/find-out-if-your-home-is-in-fore…

You can review this link to see if any of these answers apply to you, http://foreclosurecourt.org/TenantRightsInForeclosure.html
0 votes Thank Flag Link Wed Feb 2, 2011
I've found the federal reference with the terms of the act of 2009. You can go to http://www.fdic.gov/news/news/financial/2009/fil09056a.pdf to read it. Of course the legalese isn't easy reading but it clearly states what your rights are as a tenant in a foreclosure. Because of these law changes you do have the proverbial upper hand.
Web Reference: http://www.ChrisTesch.com
0 votes Thank Flag Link Wed Feb 2, 2011
You really have no rights except to get your security deposit back
0 votes Thank Flag Link Wed Feb 2, 2011
Well it seems you definitely have a problem on your hands and will most likely need to find a place to move soon. If you are looking for someone to help you find a new home please call me I can help!

Forest Priest-Realtor
Citywide Realty
512-789-6235
forestpriest@gmail.com
0 votes Thank Flag Link Wed Feb 2, 2011
Renters in Foreclosed Properties No Longer Lose Their Leases
Before May 20, 2009, most renters lost their leases upon foreclosure. The rule in most states was that if the mortgage was recorded before the lease was signed, a foreclosure wiped out the lease (this rule is known as
0 votes Thank Flag Link Wed Feb 2, 2011
Rae,

In addition to my earlier answer, just to be clear, unless this is Section 8 housing, you no longer have a lease, the foreclosure terminated all prior agreements between you and the previous owner/landlord, so you can't just "finish out" your lease, there is none. You can try to establish a new one with the new owner, but they are not required to enter into any new contract with you. Call the Tenants' Council in Austin, or use the resources on their website to help you navigate the issue to your best possible outcome.

Best regards,

Jeffrey
0 votes Thank Flag Link Wed Feb 2, 2011
Much depends on who the owner is now (post foreclosure). Some banks and mortgage companies will take the position of trying to get tenants out as soon as possible. However I have seen other institutions let existing tenants finish out their leases completely. Bottom Line: negotiate the best deal you can for yourself when you are approached by the new owner's representative ie try to get the most 1) money, 2) time, and 3) free rent you can from the new owner.
0 votes Thank Flag Link Wed Feb 2, 2011
Unfortunately, forelcosure laws in each state are different.
Idaho, the new owner would have to give you 90 days notice to vacate. If the property ownership was changed over through a "deed in lieu" of foreclosure, the new owner is obligated to honor the terms of the lease. You should call a local real estate attorney, he should be able to answer the question free of charge.
At the least a local property manager would know the laws for your location.

Check the link below, that should answer you questions.
0 votes Thank Flag Link Wed Feb 2, 2011
The mortgage company that now owns the property should be sending out an agent to offer you what is called a Cash For Keys. Unfortunately you don't have too many rights as of right now, but my suggestion is to get as much as you can and ask for at least 3 weeks to be out. Most of the time they will start at offering you $500, but I have offered some tenants in your position up to $1500 and 3 weeks to vacate the property. Good luck and if you have any questions please email me or call me.

Brian Iguchi
Realtor
Atlantic & Pacific Real Estate
biguchi@austin.rr.com
512-517-3556
0 votes Thank Flag Link Wed Feb 2, 2011
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