In fact, most tenants are likely to go towards the mortgage loans their landlords have for the rental property. Unfortunately, landlords sometimes see their rented property in foreclosure although federal and state laws dictate that tenants generally cannot be evicted before the lease expires. However, new owners of foreclosed leased properties may want tenants to leave early. In this case, tenants may benefit from a cash-for-the-keys offer. So, what should you know about the process? How to avail of it? And what pitfalls should you be aware of?
#1 – Surrendering
When it comes to bankruptcy, the term “surrender” gets a new meaning. According to the seventh and thirteenth chapters, it will activate automatic suspension as soon as you submit a claim. This gives you the opportunity to rent out your home during bankruptcy to improve your financial situation. For example, many bankruptcy applicants can freely rent out cars or real estate. The main requirement is to inform the court or the creditor about this before transferring the property. It allows them to dispose of their unsecured debts, such as credit card balances and medical bills.
After declaring bankruptcy, lenders do not become full owners of real estate. They simply receive full rights to a portion of this property equal to the amount owed. Depending on the laws of the state in which the transfer takes place, creditors can only accept or return the property after they have complied with the court’s requirements.
#2 – Foreclosures
The difference between foreclosures and rent is a notification that is issued by default when the landlord does not pay for the house. A sale notification is drawn up when the bank or lender stops receiving money. In this case, a public auction will be held within three weeks. The winner of the “sale competition” becomes the owner of the house. If no one applies, then the house belongs to the lender or the bank.
When the sale notice is prepared, the documents are attached to the facade of the house. This is often the first notice to the tenant that the home is in the process of foreclosure. The notice of the sale is then published in the legal section of the local newspaper and posted in the courthouse. Tenants may file a Notice Request with the County Registrar’s office to receive a copy of the Notice of Default and Notice of Sale when they are posted.
After foreclosure, the lender can sell your home to another person. If the lender or new owner wants to evict you, federal law gives you 90 days to stay if you rent on a monthly basis. If you have a lease, you can stay until the end of the lease if the new owner does not intend to move in. In this case, you have 90 days. The law only applies if you supported the rent and if you signed the lease before the landlord received the foreclosure notice.