The Lonergan Law Firm PLLC
12801 North Central Expressway, Suite 150, Dallas, Texas 75243
866-679-9551
www.lonerganlaw.com
September 2, 2010
The collapse of the housing market has affected people all over the country, even those who don't own a home. In May 2009, a federal law (Protecting Tenants at Foreclosure Act of 2009) went into effect that gives tenants some extra protections when the property they are renting is sold at foreclosure. It also gives the new owner guidance regarding their right to occupy the property. This law applies to any type residential property, such as apartments, condos, duplexes, etc.
When the new owner is an investor
If the new owner has purchased the property as an investment, and does not plan to live in the property, they have to honor all bona fide leases between the current tenant and the former landlord. If the tenant does not continue to make the rent payments as they are due under the lease, the new landlord can, of course, terminate the lease and start the eviction process.
When the new owner plans to live in the property
If the new owner purchased the property with the intent to occupy the property, things are a bit different. The new owner doesn't have to honor the existing lease, but they can't just tell the tenant to get out, either. The tenant is entitled to a 90 day notice to vacate, even if the existing lease is a month to month lease, or has less than 90 days left in the term of the lease.
Can the new owner offer incentives for the tenant to move?
Absolutely, as long as the new owner and tenant can come to an agreement to terminate the lease. This is sometimes referred to by tenants as "Cash for Keys," because the new owner usually offers a cash payment in exchange for the tenant's agreement to vacate the property prior to the end of the existing lease.
What about my security deposit?
Usually, the former landlord has the tenant's security deposit, and the tenant will have to pursue them to recover it. The lease in effect at the time the property is foreclosed may state who is holding the deposit. If the previous landlord used a property management company, they may be able to help the tenant locate the former owner
If you have specific questions about the new law, or need help handling your situation as either a tenant or a landlord, please contact our office for an appointment. We're happy to help!
