As the foreclosure crisis continues with no signs of abating, the effects of foreclosure trickle out to touch other parts of the economy. Those who rent housing are now starting to have to worry about foreclosures, as well. Many Florida renters have discovered that their landlords are in foreclosure and wonder what rights they have to stay in their homes and to whom they should pay rent.
Right to Stay in the Florida Residence
Congress passed the Protecting Tenants at Foreclosure Act of 2009, which allowed renters to stay in their homes if the landlord went through foreclosure. Prior to the Act, foreclosure extinguished all leases on a property and many renters found themselves evicted from their homes with very little notice, since they never knew that the mortgage lenders were foreclosing on their landlords.
As a result of the Act, those who purchase properties at a foreclosure sale must allow tenants 90 days to vacate if the new owner intends to make the property his or her residence. If the new owner does not intend to make the property his or her residence, then he or she must allow the tenants to continue to live there for the duration of the lease. If the tenants do not have a lease, the new owner must give them 90 days to vacate the property.
The Act expires December 31, 2012 unless Congress chooses to renew it.
Paying Rent For a Florida Residence in Foreclosure
The landlord technically owns the property until the foreclosure is complete, so renters should not stop paying rent altogether. If they do, landlords have the right to evict the tenants, even if the landlords are not using the rent money to pay the mortgage(s).
For those who live in a multi-family dwelling such as an apartment complex, the mortgage lender most likely included an assignment of rents clause in the mortgage, which means that if the landlord stopped paying the mortgage, the lender has the right to collect rent directly from the tenants. The lender must give the tenants notice that they are to pay rent to the lender instead of the landlord.
What Happens to a Florida Renter’s Security Deposit?
Many renters fear that they will never receive their security deposit back after the terms of their leases are over when their landlords go through foreclosure. While the law provides that the landlord must repay the security deposit even if the property has gone through foreclosure, the only recourse that tenants may have to recover this money is by filing suit in small claims court.
Consult an Attorney
In the current depressed Florida real estate market, many tenants are realizing that they may have to deal with foreclosure issues – even though they are not homeowners. If you are a tenant and your landlord is facing foreclosure, consult an experienced Orlando investment property lawyer who can advise you of your rights.