B.L.A.C. Real Estate Blog: Recovering from Rental Foreclosure

he latest housing trend in Metro Detroit simply breaks my heart-rental properties in foreclosure. 

Many times, when tenants lease a property and pay rent on time, they trust their landlord to be honest and forthright with all information about the property. Then, the proverbial floor caves in and an agent of the bank or a certified eviction notice comes. 

So, what can you do when your landlord’s home has been foreclosed? 

  1. Don’t panic. Tenants have rights to occupy the property throughout their lease period.
  2. Seek advice from a trusted source. Call a real estate agent that does not work for the bank or attorney that specializes in real estate matters.
  3. Always pay your rent with a check, certified check or money order. This is vital evidence that you will need to prove that you have paid to live in the property.
  4. Be sure your lease has a start and end date.  According to the Statute of Frauds, no verbal agreements are legally binding. This means that you will be required to provide a lease to prove that you are a valid tenant.
  5. Negotiate. The bank wants their property. You want to keep your family safe and stable. Negotiate with the bank for the appropriate time to make your transition. 
  6. Stop paying your landlord after you have received a legal notice via certified mail from the mortgage company or representative that the property has been foreclosed. Put the money in escrow until you can establish who owns the property.
  7. Start looking for a new home. At some point, the bank or mortgage representative will want you to vacate the property. However, they must honor your legal right to occupy the property as long as you pay the monthly rental amount. I am fairly sure that your lease will not be renewed; therefore, you will want to begin your home search.
  8. Month-to-Month leasing is good and bad. By definition, a month-to-month lease allows the landlord or tenant to give the other party 30 days notice to vacate. This is great if the home is a “temporary” place to live. However, if your landlord is foreclosed the bank or mortgage representative has the right to cancel your lease with a 30-day notice.
  9. Cash for Keys. Some mortgage servicers and banks will offer a tenant cash money after the property is vacant, clean and the keys are returned. These funds are only given to tenants with a legal right to occupy the property. The property must be returned to the bank in good condition with all plumbing, fixtures and mechanicals left in the property.
  10. When in doubt, check it out.  Maybe you have received a few letters from the mortgage servicer or bank.  However, your landlord says “it’s a mistake.”  Look in the Wayne, Oakland or Macomb county legal newspaper to see if your home is listed.

For more information, email jayesimpson@realtor.com.

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