Can I be evicted if my landlord's property is foreclosed on?

Question

I've been leasing a condo in Florida for years and I just found out that the owner defaulted on his mortgage. Do I have any rights? How long can I say in the condo? Can the bank just lock me out of my home?

Answer

Assuming the owner and the bank can't or don't work out a plan to save the mortgage, the property will be sold through Florida's regular foreclosure process. The length of time you'll be able to stay in your condo will depend on whether you have a lease or are renting month-to-month; if you've got a lease, when your lease was signed relative to when the mortgage was taken out; and the plans of whomever buys at the foreclosure sale. In no event can the bank or any new owner lock you out.

Lease or Month-to-Month?

Although you've been "leasing" for years, you may not necessarily have a lease. You may have a month-to-month rental agreement, which self-renews every month unless you or the landlord terminates it. These arrangements can go on for years. On the other hand, you may have a fixed-term lease that you and the landlord renewed every year.

If you have a month-to-month rental agreement, any new owner can terminate your tenancy with 90 days' notice, per the federal Protecting Tenants At Foreclosure Act. If you have a true lease, read on.

When Was the Lease Signed?

If you have a lease, try to determine when it was signed, relative to the recording of the landlord's mortgage.

  • If the lease pre-dates the mortgage, it will survive a foreclosure—any buyer at a foreclosure sale must honor your lease, just like any buyer at a voluntary sale. However, if your lease includes a "subordination" clause, you'll lose this protection. You'll be in the same boat as the renter described next.
  • If the lease was signed after the mortgage was recorded (or if it was signed before, but the lease has a subordination clause), as is true in most situations, you'll be able to live-out the term of the lease just as if the foreclosure had not taken place. But there's a couple of important "but ifs," as explained below.

Tenants With Leases: Must be Bona Fide

Tenants who have leases get to stay through the ending date only if they are "bona fide." This means:

  • They must not be the parent, spouse, or child of the defaulting owner
  • The leasing transaction must have been conducted at arms' length, and
  • The rent must not be substantially below market rate.

Tenants With Leases: New Owners Who Want to Move In

Finally, if the purchaser at the foreclosure sale is a natural person (not a corporation or other legal entity), and intends to use the property as his or their primary residence, the new owner can evict the lease-holding tenant with 90 days' notice.

For more information on the rules, both state and federal, see the link below.

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