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Renters and Foreclosure


If you’re renting a home that goes into foreclosure, state and federal laws offer you some protections.

Your Rights under Federal Law

  • The foreclosure buyer is required to honor any lease that was entered into before the foreclosure. The buyer must allow you to continue living at the residence for the rest of your lease under the same terms, as long as you continue to pay rent and meet the requirements of the lease. The two exceptions are if the tenant is the former mortgage holder, their child, spouse or parent, or if the foreclosure buyer sells the property to someone who plans to use it as his/her primary residence.
 
  • The foreclosure buyer must give you 90 days’ notice to vacate, even if there is no lease or if the time left on the lease is less than 90 days. However, this does not mean that you get 90 days in addition to all the time left on the lease. For example, if you have 60 days left on your lease then you will get 30 more days for a total of 90 days.

 


Your Rights under North Carolina Law

  • If your lease is entered into and recorded at the county Register of Deeds prior to the mortgage, then the mortgage holder and foreclosure buyer are required to honor your lease.
  • If your lease is recorded at the county Register of Deeds, you’re entitled to receive notice of a foreclosure hearing.
  • If you rent a house or an apartment in a complex that has fewer than 15 units, you’re entitled to 20 days advance notice of a foreclosure sale, by first class mail. This notice should also state that if you entered into or renewed your lease on or after October 1, 2007, you have the right to end your lease by giving your landlord 10 days written notice.


Consider the following tips to help avoid trouble if your landlord goes into foreclosure:

  • Get a written lease. While verbal leases are enforceable under North Carolina law, a written lease makes it easier to prove that you have a bona fide lease.
  • Record your lease at the local Register of Deeds office. This will provide a record of the lease. Keep copies of your lease and other important paperwork in a safe, easy to find place. 
  • Look for warning signs. Pay close attention to notices posted on apartment bulletin boards and watch for signs that the property owner may be in financial distress, such as failure to perform regular maintenance or make repairs. 
  • Keep your eye out for local bankruptcy listing. Some local newspapers print lists of bankruptcies. Be sure to check them out if you suspect your landlord is in trouble.
  • Don’t violate your lease. Even if you receive a notice of foreclosure, don’t stop paying rent or adhering to other rules outlined in your lease. Just because your landlord goes into foreclosure doesn’t mean you’re off the hook for paying rent.
  • Remember your security deposit.  A landlord facing foreclosure will likely have spent your security deposit. Your best chance to recover your deposit is to try to work out an arrangement with your landlord. A second possibility:  if the money is held by a real estate company, ask the company not to release the funds until the foreclosure is resolved. 
  • Negotiate with the mortgage company. Once the property has been sold and reverted back to the mortgage company, you're free to try to negotiate with them. Options include making the monthly payments, signing a new lease, or even offering to purchase the property. 
  • You may still be asked to move.  Some mortgage companies want the property vacant even if you've provided proof of a legitimate lease.  In exchange for the renter agreeing to vacate early, they will offer money to cover your moving expenses, usually $1,000 to $2,000.



We Can Help

If you have questions about your rights as a renter during foreclosure contact us for help or call toll free within North Carolina 1-877-5-NO-SCAM.