Frequently Asked Questions - Renter
The Protecting Tenants in Foreclosure Act extended the notice period before eviction to 90 days, but was unclear whether or not the tenant must pay rent during that period. While being evicted due to foreclosure now requires 90 days notice, eviction for non-payment of rent still only requires 3 days notice. Most eviction attorneys recommend that the bank/investor does NOT pursue an eviction for non-payment during the 90 day notice period. This does not mean that they cannot try to collect on this past due rent after the 90 days expire. In fact, the bank/investor is entitled to fair market rents from the day they take ownership and will typically receive a monetary judgment against the homeowner for the unpaid rent at the end of the eviction process. This is one more reason why renters should consider accepting cash-4-keys rather than fight the eviction.
This varies from state to state and, in the case of rent-controlled areas, it could vary from city to city. In California it takes approximately 60-90 days if the eviction is contested and the tenant answers the complaint.
After a property goes to foreclosure the bank/investor will have a representative contact you. During this occupancy check, their first objective is to find out if you are a renter or the prior owner. They will also want to know if you intend to move or if they can negotiate a move-out date. If you are not home, they will leave a note with a contact number. It is in your best interest to call them or they could assume that the property has been abandoned.
If you are living in the property they cannot just change the locks and lock you out of the property, instead they must first give you notice (in California renters without a long term lease get 90-days notice while owners get 3 days notice), then file an unlawful detainer lawsuit (eviction), and finally get a judgment ordering the eviction. The eviction process typically takes 30-90 days in California. Most banks/investors will offer you cash-4-keys paying you to leave the property quickly and clean.
If they believe the property is vacant or abandoned they can enter and change the locks. If you come home to find the locks changed and you are still living in the property, contact them (they typically leave a note on the door or window with a contact number) and if you can prove that you still live there, they should turn over a new key.
The security deposit remains with the prior owner and the bank/investor that acquired the property is not obligated to refund the security deposit. Often times the lender/investor will offer a cash-for-keys incentive for you to be out by a certain date. Even if you accept the cash-for-keys, you can still pursue the collection of your security deposit through small claims court from your prior landlord. Keep in mind that if you stopped making rent payments prior to the foreclosure sale, the landlord can apply the security deposit toward the unpaid rent.
The rent is still due regardless of the loan status. As long as you are receiving the benefit of the occupancy as outlined in your lease/rental agreement, then you are obligated to pay the agreed upon amount. Even if a landlord is in foreclosure, they can still evict you for non-payment of rent. Many renters stop paying rent when they find out about the foreclosure because they do not believe that the landlord will pursue an eviction if they are losing the house anyway. Keep in mind that sometimes a landlord may be in foreclosure, but actively pursuing a modification of the loan terms. In this case they are working to correct the issue and any loss of rent may impact their ability to receive a modification.