Agent2Agent in Howell>Question Details

Lisa Bender,  in Howell, MI

What happens to tenants when a home gets foreclosed but they have a lease with the owner?

Asked by Lisa Bender, Howell, MI Tue Dec 9, 2008

I've heard the banks now have to honor these existing leases, so tenants would have to mail the rent to them? Is this true?

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6
nothing i suppose cause they still have to move
0 votes Thank Flag Link Tue Jun 9, 2009
Tenants effectively become victimized. If a home forecloses, then the tenant's lease effectively terminates. The tenant has a lease with the homeowner- not the bank. When the bank takes possession of the home the previous owner no longer has the right to lease the property. The lease does not transfer to the bank when it takes possession.

Some tenants get lucky though. Check out this article:

"Illinois Sheriff Refuses to Evict People from Foreclosed Properties"

http://www.kcbs.com/pages/3110472.php?
0 votes Thank Flag Link Tue Dec 9, 2008
Yes that can be the case, but the renter has to show proof of a lease and subsequent payments made to date. Real Estate One has a great lease that provides for such protection for the Leasee.

Liz Tintinalli
Real Estate One
http://www.realestateone.com
Web Reference: http://www.lizindetroit.com
0 votes Thank Flag Link Tue Dec 9, 2008
funny you should ask. This article just came out today

http://money.cnn.com/2008/12/08/real_estate/tenant_foreclosu…
0 votes Thank Flag Link Tue Dec 9, 2008
Lisa, all leases should be drafted with attorneys. Both parties need legal advice. Banks do not have to do anything regarding unsuspecting tenants. You can check with Michigan Associatiation fo Realtors to verify what is legally true. The agent below is correct - the tenant is in the middle, unless the tenants attorney required language that proof of mortgage payments were made by landlord.
0 votes Thank Flag Link Tue Dec 9, 2008
It is not true. the banks are not in the landlord business. the liability is too great. Some cities etc are trying to pass ordinances with a minimum of 3-6 month eviction periods which then violate some local ordinaces that require rental buildings to have a certificate of compliance or occupancy that mandate they are pulled upon a bank takling ownership and the new owner has to reapply, then fining the building for having a tenant without a co or coc. . In most cases the bank that forecloses does not end up with the property. it is taken by the PMI company, or fnma or freddie mac or hud and even sold as part of a pool to another bank or investor. The unfortanate thing is the tenant is caught up in the middle. all the banks i list for offer a generous cash for keys to assist the tenants in moving. In some buildings the tenants though are not being inncocent refusing to leave and damaging the building, stripping cabinets, appliances, furnaces and all the copper when they do leave. As a listing agent i try to assist the innocent ones who paid their rent but landlords didnt seem to poay the mortgage in fining new homes or apartments and assist them with getting the cash for keys. it is tough for all involved on either side of the fence.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Tue Dec 9, 2008
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