WHAT HAPPENS TO RENTERS WHEN A PROPERTY IS IN FORECLOSURE?
In some jurisdictions, if a lender forecloses on property, the owner must vacate property. However, tenants tend to have stronger rights, and will be permitted to stay in the property for a period of time.
If this happened to you and you paid on time your rent, however landlord is collecting and not paying the bank and the bank is about to foreclose on the house. Where does that leave you? Will you be thrown out?
These are some questions I would ask the lender attorney:
When and where will the foreclosure sale take place?
Can you start to make your payments to lender instead to landlord?
If the lender purchases the property at the foreclosure sale, will the lender allow you to stay on the property? If so, for how long? At a foreclosure sale, more so than not, no one will purchase the property. Thus, the lender actually buys back the property and owns it. However, most lenders do not want to be in the real estate business and will want to get rid of the property. Now it may leave you ask yourself if you would want to purchase the property? You may be able to get a good deal at the foreclosure sale if you are lucky.. However, before you do this, you may want to do title search on this property, and find out what your foreclosure rights and obligations will be. Too many times people believe they can buy super deal by buying at foreclosure sale. This may not always be the case.
Overall, in most cases tenants cannot be thrown out on the street without court order. The new landlord, the successful purchaser at the foreclosure sale will have to go to court to seek and eviction court order. According to the Lake County Property Investors Association, In Illinois when the home renter with bona fide lease is sold at the foreclosure (sheriff sale), the tenant has rights. Provided that tenant is not in lease violation, they must be allowed to remain on the property until the end of the lease, and must be given 90 days written notice of non-renewal of lease. With exception month- to month lease can be canceled as long is done 90 days ahead of time.