When a landlord defaults on their mortgage or deed of trust, the lender may initiate foreclosure proceedings and the tenant, faces the possibility of being forced out of the property. It is important for renters to know and understand their rights in such a situation.
Tenant rights during landlord foreclosure
Until the foreclosure proceedings are fully concluded, the landlord still owns the property. Therefore, a tenant must continue to pay rent to the landlord. If the tenant stops paying rent while the foreclosure proceedings are ongoing, the landlord can evict the tenant.
Under the Protecting Tenants at Foreclosure Act and Maryland State law, three separate notices concerning the foreclosure must be sent to the tenant. The first notice is sent by the foreclosing party contemporaneously with the filing of the complaint to foreclose and alerts the tenant of the foreclosure. The second notice is sent by the foreclosing party between 10-30 days before the foreclosure sale date and informs the tenant of the date, time, and place of the sale. The final notice is sent by the party that purchased the property at the foreclosure sale and who now owns the property. The final notice provides the tenant with information on the sale and contact information for the new owner.
In general, the new owner must allow the tenant to remain in the property until the lease expires. If the lease is month-to-month, the new owner must allow the tenant to remain in the property for 90 days. Once the tenant’s current lease expires, the new owner may consider creating a new lease with the tenant; however, the new lease is not required to contain the same terms as the previous lease.
If the new owner will occupy the property, the tenant must be given 90 days written notice. If the new owner wants to avoid the eviction process, they may offer the tenants a “cash-for-keys” deal. In these deals, the new owner typically pays the tenant a lump sum to move out of the property before the end of the lease. As part of these deals, tenants are often required to waive any rights they have against the new or prior owner.
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Attorney Ryan D. Lewis offers legal services for real property tax liens, foreclosures, landlord/tenant disputes, and other real estate property law issues.
Mr. Lewis has been actively involved in servicing thousands of real property tax liens. The wide-ranging real estate and litigation experience of Mr. Lewis allows him to identify and adapt foreclosure methods in order to guide the redemption process and minimize client risk. When a lien fails to redeem, Mr. Lewis is able to leverage his knowledge and skills in order to maximize asset protection and increase his client’s wealth.