When Tenants Get Nervous About Foreclosure

By E-Renter Tenant Screening
Posted on March 9, 2010 under Landlord and Tenant FAQs | icon: commentBe the First to Comment

moving-day1-300x199More than 300,000 homes have received foreclosure notices in each of the last several months in the U.S., including plenty of rental properties whose owners cannot meet their loan obligations.

What happens to tenants when the home they are renting is foreclosed upon?

According to the Protecting Tenants at Foreclosure Act, whoever takes title to a property under foreclosure must protect the rights of tenantsTenants with a lease are allowed to stay to the end of the lease term, unless the property is sold to a buyer who intends to make the home a primary residence. In that case, the tenants must receive a 90-day termination notice. The same 90-day termination notice is required if there is no lease in place.

And how do you satisfy a tenant who demands proof that your property is safe from foreclosure?

Tenants who bring up foreclosure concerns may have been affected in the past, are worried about losing their security deposit, or have heard about rental properties being foreclosed upon. Landlords can reassure tenants that their property is safe from foreclosure, and inform them of their rights. Reassure tenants that their security deposit is safe, and let them know if it is held in a separate account, as is the law in many states.

However, your responsibility as a rental property owner most likely ends there, with no obligation to prove to your tenants that you pay your mortgage on time. Your financial records can remain private, no matter what a tenant may demand. To make tenants feel more comfortable, consider including language from the Protecting Tenants at Foreclosure Act in your lease.

Pre-screen all tenants as part of your standard application process. Background and credit checks will help ensure you rent to qualified tenants. For more landlord resources, including forms and information on tenant screening, turn to E-Renter.com.

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