Dec 4 2015

What are My Rights as a Tenant under Foreclosure Laws?

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I just found out that the house I’m renting is in foreclosure. The bank wants us out but I’ve been paying my rent consistently. What are my rights as a renter?


Unfortunately, as real estate lawyers in Needham, we’ve heard this question far too frequently. Ever since the extreme downturn in the real estate market of 2008 and 2009,  rental property owners have been defaulting on their loans at staggering rates; often leaving their tenants unaware of their own living situations.

However, because of 2009 changes to federal regulations, most tenants under leases will be able to continue their lease under the new owner. Those tenants that are living under month-to-month contracts are legally given at least 90 days to relocate. Unfortunately, tenants have no legal recourse against their former landlord as either contract, both month-to-month or term lease, extends or ends in the same manner, regardless of who the owner of the property is. However, a lease-holding tenant that is forced to move before the conclusion of said lease, in the event that the buyer of the property wants to occupy the property, is now longer in the same position they were before the foreclosure. In this case, the law allows a tenant to sue the former landlord or property owner in small claims court. This is due to the fact that the landlord entered the agreement to deliver the property and its use for the entire lease term; referred to as “covenant of quiet enjoyment”. The covenant is considered broken when the property owner defaults on their mortgage, allowing the foreclosure process to cause damages to the lease-holding tenant.

A tenant under these circumstances can recover the costs of moving incurred. These costs can include moving costs, application fees and the difference between the new rent and their lease amount at the foreclosed property.

A real estate lawyer who works to protect the rights of tenants can help you determine whether or not your specific instance allows for any compensation. If your rental property has been recently foreclosed on, make sure you know your rights under the law by calling us at 781-444-9676.


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