Keller Williams Southern Arizona
You as a renter can do the same, any title company can setup servicing for you... cost is $150 initial setup fee, and usually $15/mo to collect payments and send checks to the bank.
Associate Broker with Tierra Antigua Realty, Tucson AZ
After the property forecloses the Bank will give you sufficient notice.
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.
Does It Make Sense to Evict Tenants?
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.
"Cash for Keys"
To encourage tenants to leave quickly and save on the court costs associated with an eviction, banks offer tenants a cash payout in exchange for their rapid departure. Thinking that they have little choice, many tenants -- even Section 8, protected tenants -- take the deal. It doesn't help them much as they join the swelling ranks of newly displaced tenants (and former homeowners) who are competing to find an affordable new rental.
What Can a Foreclosed-Upon Tenant Do?
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.)
Suing in Small Claims Court
A lease-holding tenant who has to move out so that new owners may move in might consider suing their former landlord in small claims court. Here's how it works.
After signing a lease, the landlord is legally bound to deliver the rental for the entire lease term. In legalese, this duty is known as the "covenant of quiet enjoyment." A landlord who defaults on a mortgage, which sets in motion the loss of the lease, violates this covenant, and the tenant can sue for the damages it causes.
Small claims court is a perfect place to bring such a lawsuit. The tenant can sue the original landlord for moving and apartment-searching costs, application fees, and the difference, if any, between the new rent for a comparable rental and the rent under the old lease. Though the former owner is probably not flush with money, the awards in these cases won't be very much, and the court judgment and award will stay on the books for many years. A persistent tenant can probably collect what's owed eventually.
You can make an offer on the house as well
Other answers (except one) give you good basic information. For practical purposes you will have up to 3 months warning. Review wording on your rent/lease contract. Provided your payments are up-to-date foreclosing organization has to honor the terms. If new owner wants to move in, he has to give you 3 month notice. If new owner is investor and is not moving in, he has to honor terms of the contract (as written). To be absolutely certain you can contact Lawyer Referral Service at (520)623-4625 â€“ (service of Pima County Bar Association). For a non-refundable fee of $35 (due at the time of the referral), the Lawyer Referral Service will provide you with a licensed attorney who will provide you with a 30-minute consultation. That should be enough time to answer your question.
George in Tucsonï€
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Best of Luck.
Tierra Antigua Realty
Most likely your lease contract will be honored by the owner's bank if there is a foreclosure. The wording on your lease contract will need to be reviewed. Check with the Arizona Tenants Bill of Rights "Handbook" for more information under the link at: http://www.arizonahomesland.com/forbuyersorrenters.html If you not sure, you may want to contact your attorney.
Some banks may even offer "Cash For Keys" at the time of a Foreclosure if they wish to put the home back on the market and not be the landlord until the end of the lease term.
The good news? It is often less expensive to buy in the current market than to rent.
May I wish you the best.
Arizona Homes and Land