Tenant Evictions in Foreclosure: Rights and Recourse

A financial crisis, like the recent sub-prime mortgage crisis, can result in millions of tenant evictions after the property they rent enters foreclosure. When hard times cause a landlord to default on his or her loan, the bank becomes the new landlord and - as the bank will make clear to you - banks aren’t in the rental business. The bank will typically move to sell the

proper ty as soon as it can, resulting in the eviction of any tenant living on the property quickly and with little war ning. Here’s how it happens and what renters-in-foreclosure can do about it.

Your Landlord in Default Sometimes landlords can’t cover the mortgage payments on the property that they are renting out to tenants. This can

happen for many reasons. The landlord may have taken out too big of a loan in the first place, or maybe there is a second,

or even third, mortgage on the property that the landlord is behind in paying off. Whatever the cause, if the bank begins

foreclosure proceedings on the property, it is ver y likely that the bank will eventually attempt an eviction of any tenant renting

there. Although you can’t prevent the foreclosure from wiping out your lease, that lease was a contract, and as such, the landlord

who signed it is still bound by its terms. Simply sue your ex-landlord and they can be held accountable for the economic

consequences of his or her failure to deliver the property as provided in the lease.Almost all leases contain a "covenant of quiet enjoyment", which is a material term of the contract, and a landlord who

causes a tenant eviction by defaulting on his mortgage is in violation of this covenant. Small claims court is the best place

to do this, and you can try to recoup economic loses such as:

• Moving expenses, Apar tment searching costs, The difference between your new and old rent, Application fees, Other reasonable costs associated with relocating

Be aware though, that the landlord is not likely to be bursting with available cash. A judgment against your landlord is good

for a long time, however, and if you pursue it diligently, you may eventually be able to recover your costs.