If a property is in foreclosure, do I pay my rent to the landlord or the bank?
I live in a property that has been auctioned twice. Do I still have to pay the the rent to the person who says he still owns the property? He says that the foreclosure is not true, although it is listed on Realtytrac for sale by trustee.
Under common law, a renter owes all rent payments to the owner until the property is sold. A foreclosure does not terminate a landlord’s right to collect rent until the property is sold in either a court-supervised or private sale. The rules vary by state. Therefore, you must continue to pay the landlord until the property is sold to another party. When you receive a notice the property has changed ownership, contact the new owner. It is likely he, she, or the property management company will contact you as soon as the new deed is filed with the county.
Foreclosures & Leases
Under common law, a foreclosure terminated a lease. However, this rule changed when President Obama signed the "Protecting Tenants at Foreclosure Act of 2009" on May 20, 2009. Before this date, renters lost their leases upon foreclosure. The rule in most states was 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 a year or less, it was common for a mortgage to precede the lease and destroy it upon foreclosure.
After May 20, 2009, leases survive a foreclosure, which means a tenant may stay at least until the end of the lease. Month-to-month tenants are entitled to 90 days’ notice before having to move out.
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Here, if you have a lease you may stay until the end of your lease term. If your lease agreement spells out the terms for a month-to-month lease, then if there is a foreclosure you have 90 days to quit the property. Consult with a lawyer who has property experience or your local tenants’ union to learn more about the 2009 law, and any local laws protecting tenants.
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