Rental properties and foreclosure
July 4, 2016 — Has one of the tenants you helped place in a rental received a notice of foreclosure? Do the tenants have to vacate the home they rented?
Assuming there was an actual judgment of foreclosure entered against the original homeowner, the tenants may have to leave — and sooner than was the case under prior law.
Previously, a federal law had granted tenants up to 90 days to move after a rental home was foreclosed. However, that temporary provision expired at the end of 2014. Under the current state law, the purchaser named in the certificate of title following foreclosure can provide a 30-day notice of termination. Assuming the notice complies with statutory requirements, the tenants then have to vacate the property by the termination date and pay any rent due for the time they remain in occupancy.
To protect yourself and your clients from being caught in a foreclosed rental, you should always ask the listing agent about the status of the owner’s property. Is the owner current on his mortgage? If not, have foreclosure proceedings started? The answers to these questions can help your tenant decide if he or she wants to rent the property.
If you work with landlords to place tenants, you should also ask these questions of the landlord before considering taking the listing. If an owner is either hesitant to answer these questions or claims not to know, you may want to contemplate not taking the listing.
The Florida Real Estate Commission has punished agents in the past for failing to disclose that a property offered for rental was in foreclosure or distress. It is legal for the owner of a distressed property to rent the property, and for a tenant enter into a rental agreement. However, real estate agents or property managers involved in the transaction should make sure that each side is fully informed of the status of the property before entering into a lease.