Tenant Tip: Renting a home in foreclosure

In King County, 1,429 homes received a foreclosure notice in February, 2011 alone. According to RealtyTrac.com, Washington homes that received a notice of default, foreclosure filing, auction or a bank repossession notice reached 4,385 in February. For tenants who are renting a home that receives any of these notices, it can be a difficult surprise to navigate through. More often than not, tenants have no idea that their landlord may not be paying their mortgage until they see a note posted on the front door.

Foreclosure is a complex problem and it can have many variables depending on what stage of foreclosure the owner is in, the financial obligations, bank procedures and market trends. During this difficult process, tenants who rent homes in foreclosure may find themselves confused about whom to pay rent to and how quickly they may need to move out. While this tip may provide some basic information and resources for renters in foreclosed homes, tenants who are in this situation may want to consult with an attorney — especially since each foreclosure case can vary depending not only on the owner and the bank, but also on the type of rental agreement a tenant has with their landlord, and their obligations under that agreement.

In response to the ongoing housing crisis, Congress passed the Protecting Tenants at Foreclosure Act in 2009. Under this federal law, the new owner who purchases a home at a foreclosure sale is required to provide tenants renting the foreclosed home with a 90-day notice to move out if the new owner intends to move in to the home. If a tenant is on a lease, the new owner can choose to honor the lease or provide the 90-day notice if they want to move in themselves. If a tenant is on a month-to-month rental agreement, they are still entitled to the 90-day notice.

In addition there is a Washington State law that requires the foreclosing party, such as the bank or trustee that is foreclosing on the home, to send a notice to tenants notifying them that the home they are renting may be sold within 90 days. This notice will also include a reference to another section of the state law that says the new owner has to provide renters a 60-day notice after the sale has been made. To repeat, under the state law, a tenant would receive a 90-day notice before the sale and a 60-day notice after the date of the sale. Under the federal law, the new owner would be required to also provide a 90-day notice after the sale in addition to state law requirements.

If the home you are renting is in foreclosure, you may want to contact the county auditor for the county in which you live. King County residents can search their property on the King County tax assessor webpage to find out information about who owns the property. Tenants may want to recheck this information frequently to make sure that they are paying rent to the right person, especially in situations where a tenant may not have received proper notification about the foreclosure or proper move out notices. Tenants can ask the new owner for a copy of the Trustee’s Deed. To verify the legitimacy of the deed, tenants can access their local county auditor. Information for auditors by county in WA may be found at the Washington Land Records and Deeds Directory.

If you are concerned that your current landlord may be being foreclosed upon, and you have questions about rent payment, one thing to keep in mind is that until your current landlord is no longer the owner of the property, you continue to pay rent to them. While it may seem frustrating that you pay rent to someone who may not be paying their mortgage, that sense of unfairness does not mean that your obligations as a tenant change, and it does not change your duty as a tenant to pay rent.

Tenants who are renting a home in foreclosure should contact an attorney for legal advice and to address questions regarding rent payment as well as any concerns they may have about how the laws apply in their case and how to proceed. For a list of free legal referrals, you can access the Legal Assistance Guide on our Tenant Services website.

This Columbia Legal Services Washington LawHelp webpage is a useful resource for tenants who are renting a foreclosed property and have questions about rent payment, how their deposit is transferred, how to address repairs and how these laws may apply to their particular situation. Tenants who have questions about their rights and need information and referrals may call the tenant services hotline at 206.694.6767 M, W and Th from 10:30am-4:30pm to speak with a tenant counselor.

The information contained in this tip or linked to the Solid Ground Tenant Services website is for informational purposes only. Solid Ground makes no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to its website. Solid Ground cannot act as your attorney. Solid Ground makes no representations, expressed or implied, that the information contained in or linked to its website can or will be used or interpreted in any particular way by any governmental agency or court. As legal advice must be tailored to the specific circumstances of each case, and laws are constantly changing, nothing provided herein should be used as a substitute for the advice of competent counsel.

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