BY: HOUSERIE 12/18/2013
With the downturn in the economy, numerous homes have gone into foreclosure. This is mainly because people have defaulted on their mortgage payments, and can’t refinance due to underwater homes. Since last year the foreclosure rate has declined. It is not only the homeowners who face the consequences of foreclosure, but the tenants as well. The tenants are the ones who actually get evicted when the homeowner defaults on the loan. So, aren’t there any rights for the tenants, in the event a property gets foreclosed on? There are, but the rights differ based on the situation.
What can happen to the renter during a foreclosure?
The laws and rights of the tenants vary depending on the residential or the rental agreement and the local laws. Some laws specify that the tenants should not suffer simply because the landlord couldn’t make the timely mortgage payments and thus could not manage to retain the property. In fact, a new law was passed a few months back in Illinois to protect tenants in the event of foreclosure. Illinois State Senator Jacqueline Collins stated that “Tenants should not suffer for the financial troubles of their landlords,” and “this legislation extends our foreclosure relief efforts to renters, who make up 40% of households affected by foreclosure.” This law requires the new owner to either provide a 90 day notice to the tenant prior to eviction or to evict the tenant only after the end of the rental lease.
A similar law was enacted in 2009 in the US. This law is known as the Protecting Tenants at Foreclosure Act (PTFA). According to this law, the tenants have the right to remain in the property until the lease ends. Furthermore, the owner will also have to provide a 90 day notice period before evicting the tenants.
Another great thing about PTFA is that it does not preempt state and local laws. This means tenants will be able to enjoy the protection of the state and local laws if those are stronger than the PTFA.
Limitations on PTFA are:
Renters have rights in the event of foreclosure and in most cases cannot be evicted right away. However it is crucial for the tenant to be informed about the local and state laws as well as the Protecting Tenants at Foreclosure Act (PTFA) so they can protect themselves from being evicted.
Sam works as an article writer for an Illinois based mortgage community called Mortgagefit. For more information visit here http://www.mortgagefit.com/