One frequently overlooked victim in foreclosures are the renters who often find themselves caught in the middle of the tug of war between property owners and mortgage lenders. Although a few laws have been put in place to protect renters when their landlords lose possession of their homes, there are times when the sudden change in ownership can cause renters to suffer losses as a result. If this occurs, you may be able to sue your landlord and recover compensation for those damages.
Tenants’ Rights During Foreclosure
In 2009, the Helping Families Save Their Homes Act was signed into law which contained several provisions to help mitigate the damage the caused by the 2008 housing crisis. Specifically, renters are protected in two ways in the event of a foreclosure:
- The new owners had to honor the lease agreement between the renter and previous owner
- Tenants on a month-to-month lease must be given a minimum 90-day notice to move out
Unfortunately, these rules only apply if the new owners have no intention of immediately moving into the home. If the new property owner plans on making the residence their primary home, the tenants are required to move out regardless if they have a lease or not; though the new owners must serve them with a 90-day notice.
Suing for Damages
Such short notice can cause tenants to incur costs they otherwise would not have paid if the home had not been repossessed such as:
- Hiring movers
- Acquiring storage space
- Paying a new security deposit or loss of the deposit given to the landlord
- The cost difference between the old and new rent
- Costs associated with locating a new place to live
To prevail in court, you must show you would not have incurred these costs if it weren’t for the foreclosure. For instance, you had planned on staying in the home for several years but were suddenly forced to move because the house had been repossessed. Because of this people who have leases that were forcibly broken by the foreclosure action will typically have the strongest cases, especially if the landlord failed to disclose the house was in foreclosure status when he or she rented to the tenants.
People on month-to-month leases or who don’t have legal agreements at all may not have enough legal standing to successfully sue for damages.
While you can sue the landlord in small claims court, it’s a good idea to consult with a general practice attorney for assistance with building the best case possible for recovering compensation for your losses.