Are Renters in Foreclosed Properties Always Evicted?

A landlord facing foreclosure has direct impact on renters. Laws vary by state and also depend upon the practices of local lenders during the foreclosure process. Legal notice of foreclosure is given to the landlord and not necessarily the renters.

Rental Agreements

• Typically, state laws permit the lender or new owner of a foreclosed property to determine whether renters can remain inside a home or apartment building. If a new landlord decides to permit a renter to remain, a new lease agreement must be signed. There is no guarantee that the same rental agreement or monthly payment rate would remain in effect.

Foreclosure Notice

• When a "lis pendens" notice of foreclosure is given to the owner, all rental agreements, contracts or leases are voided. Routinely, legal notice of a foreclosure is issued at least 20 days before the property is auctioned or listed with a real estate agency.

Utilities and Deposit

• Renters should contact the landlord or an attorney prior to the foreclosure regarding recovery of a security deposit paid to the current owner. It is not legal in any state to turn off a property's utilities property while it is occupied by tenants during foreclosure processing.