Hagerstown Commercial Real Estate Agent

Call Us Today: 301-991-0207

Test Text, Please ignore this text

What are the Tenant’s Rights while the Property is in Foreclosure?

tenant-lawAlthough the real estate market is on more solid ground that was the case beginning in 2008, there remain a significant number of residential properties in foreclosure at any given time. Some of these properties are occupied by tenants at the time they go into foreclosure. Tenants need to understand their legal rights when the premises they lease are in foreclosure.

State Law Governs

Unlike bankruptcies, which are creatures of federal law, foreclosures are governed by state law. Although there is some variation in foreclosure laws from state to state, when it comes to the rights of a tenant during a foreclosure, the statutes on the books in all states are similar.

Honoring the Existing Lease Agreement

The most significant right of a tenant residing in a residence that is in foreclosure is the legal right of the renter to have the terms of the lease agreement honored completely. Any tenant on the premises must be permitted to remain at the property until the lease comes to its natural end.

A tenant does have the right to negotiate a termination of the lease agreement during the foreclosure process. The tenant can voluntarily agree to leave the premises on his or her own volition during the foreclosure process.

Common Misconceptions

A common misconception associated with a tenant in property subject to foreclosure proceedings is that the renter must take affirmative steps to protect his or her interests. In fact, a tenant’s interests in the real estate automatically is protected pursuant to the terms and conditions of the lease agreement. The tenant does not have to take action in the foreclosure state in order to protect his or her legal rights.

Change of Ownership

If the mortgage lender prevails in a foreclosure case, that entity takes the place of the original landlord. The mortgage lender becomes the entity to which rent is paid. The mortgage lender is not legally able to change any term or condition in the lease agreement.

In some cases, ownership of the property will change a second time. The property may be sold by the mortgage lender at auction to a new owner. The successor owner of the real estate must also honor fully the terms and conditions of the lease agreement.

A tenant has a full and complete right to have the terms and conditions of a lease agreement honored through all phases of a foreclosure process. Any violation of this right can result in the tenant having the right to pursue legal action against the offending party.


This website and its content is Copyright © 2014 Roberto Gonzalez All Rights Reserved


roberto gonzalezRG REALTY INC