Home Buying in Williamstown>Question Details

Star, Renter in Williamstown, NJ

Can a house that is in foreclosure be used as a rental property?

Asked by Star, Williamstown, NJ Sat Jan 22, 2011

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4
Robert Pratt’s answer
Hi there, Star. Extrapolating a bit from the information you have provided in your question, we assume that you are asking, from the perspective of a prospective renter, whether you should be concerned about whether a property is going to be taken back via foreclosure by a bank after you rent from the owner - leaving you subject to possible eviction by the lender.
Let us know if this is NOT what you mean.
If our assumptions are correct, that is a concern - especially these days.
Many legislatures are taking this problem into consideration and/or passing laws to TRY to address the situation.
As a prospective renter, you should definitely consult your leasing agent expert (if you don't have one, it's a good idea to get one!) about this.
You may want to consider asking a potential landlord to provide you with some type of reasonable proof of mortgage payment - at the beginning/before you sign the lease, and, perhaps, monthly.
Good luck to you!
Web Reference: http://www.dreamtown.com
0 votes Thank Flag Link Tue Jan 25, 2011
Any property that is in foreclosure can be rented but the state laws may grant the renter additional rights outside of The Protecting Tenants at Foreclosure Act. The law that Suzanne mentioned in reference to a bank not being allowed to evict tenants is also known as, The Good Cause Requirement, and it does not apply to residential properties with 2 or less units. Therefore, if your building is 2 or less units and the bank takes title to the property you will be allowed to live out your lease or be given 90 days before the bank is allowed to file eviction proceedings. Also, effective February 16, 2010, additional state laws provided tenants living in foreclosed home with more protection.

To receive the maximum protection under the law you will need to follow up on the foreclosure proceeding. Most laws are time sensitive and a delayed response can lead to a forfeiture of your rights. To receive the maximum protection of your rights you will need to know if and when the property is auctioned. You can track the foreclosure process through public records or by clicking the link here, http://foreclosurecourt.org/foreclosureprotection.html

http://www.foreclosurecourt.org
0 votes Thank Flag Link Mon Jan 24, 2011
Absolutely....the home belongs to the owner, along with its utility, until the foreclosure is completed and the property ownership reverts to the lender.
0 votes Thank Flag Link Sun Jan 23, 2011
I believe you are asking if the home can be rented out while a foreclosure action is pending, The short answer is yes. It's always best to consult with an attorney, but I am a landlord and a realtor so I do know that tenants in New Jersey are protected and cannot be evicted by the bank when and if they take back the property as long as the tenants are in compliance with the lease. The only thing that happens is the bank becomes the 'new' landlord.

The other thing is the foreclosure process here takes a very long time. At least 18 months to two years and sometimes even longer depending on what the landlord decides to do about the situation. For example he may apply for a loan modification or file for bankruptcy, both of which could delay the process even further.

To protect yourself as a tenant, make sure you pay your rent on time and keep your security deposit up to date (it will be transferred to the bank as landlord if and when the bank takes over). Your rent should continue to be paid directly to your current landlord as long as they still own the building.

You can also check the NJ consumer affairs website for more information here: http://www.state.nj.us/publicadvocate/public/issues/tenants_…

Good Luck!
0 votes Thank Flag Link Sun Jan 23, 2011
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