Can a Renter Break a Lease if the Home Is Being Foreclosed On?
- Under the legislation, the Protecting Tenants at Foreclosure Act signed by President Barack Obama in May 2009, your lease remains in force throughout a foreclosure proceeding. Previously your lease was considered null and void once ownership of the property had passed to the bank. The change means the foreclosing lender cannot require you to move out. However, it also means you cannot break the lease without good cause – you are still responsible for paying the rent until the end of the lease period.
- If you do want to move, examine your lease closely. Most leases can be broken if the property is allowed to become “uninhabitable.” Once the house passes into bank ownership, you may find it’s impossible to get any work done on the property. If you encounter serious disrepair problems, this may be a valid reason to break the lease.
- If someone buys the foreclosed property with the intent to live in it himself, he does have the right to break the lease, and let you out of your obligations. He must give you 90 days' notice to vacate the property, if this is longer than your remaining lease period.
- You may find you are offered what is known as “cash for keys” by a lender or new owner once the foreclosure is complete. This is a payment in lieu of your remaining lease period in exchange for you vacating the property. Examine such a deal carefully to ensure it reflects your costs for moving and finding a new place to live on short notice.
