If you are renting a property and find out that the homeowner is being foreclosed on, don’t panic there are steps to take and responsibilities for the tenants. Paying your rent is a major concern for tenants when this situation happens. Your rent payments will be due to the bank that foreclosed the property and should no longer go to your landlord. If the property is sold, the new home owner should receive payments. Before doing this, you should make sure and ask to see formal proof of ownership of the property.
Your lease is still enforceable by the new home owner or bank, even if you are on a month to month lease. As a tenant you can insist on remaining in the property for the remainder of the lease. The only exception is for new buyers who intend to live in the property. In this situation, a new owner must give you 90 days notice to leave the property. When it comes to your security deposit you still have the right to have it returned. It is the new property owner’s responsibility to pay back your security deposit at the end of the tenancy, and they must ensure that they receive this from the old owner.
If you are renting a property through a property management company they will help you through the process of living in a property that has been foreclosed on. Property management companies hold security deposits so this ensures you that your security money is safe is the property is foreclosed on and a new owner buys the property.