What happens to the tenants when a landlord allows the rental property to go into foreclosure? This is a question that has recently become more and more common as the sheer number of foreclosures continues to rise. Some statistics show that nearly 40% of people losing their home to foreclosure are indeed renters.
It used to be that the tenants' lease agreements were wiped out by the foreclosure, and the new owner (once the property is sold) did not need to honor that lease agreement. This meant that many tenants were forced to vacate the property. In light of this problem, new laws were enacted that kept the lease agreement intact after a foreclosure of rental property, so long as the lease was signed prior to the notice of foreclosure.
See the article below for more information on the rights of tenants who rent properties that go into foreclosure.