I'm a tenant renting a foreclosed home. Help!

Posted On: May 2009

Editor: Tiffany Binate

May 2009

Question: I'm a tenant in a condo that was foreclosed. What, if any, are my rights?

Answer: Tenants are often the last to know that the rental property they are living in is in foreclosure. Some are made aware by letters in the mail, calls, or people showing up interested in buying the house. Unfortunately there is not much you can do except understand the time frame you have to work with, and the possible things that may happen, so that you may consider finding a new home if necessary.

The foreclosure process in Illinois takes around 9 months, and typically begins 30 days after the homeowner is delinquent on their mortgage. The homeowner then has around 7 months to either bring the terms of the mortgage current, negotiate a new payment arrangement with their lender, or sell the house to avoid a foreclosure auction.

If none of the above options happen after 9 months, the house will be sold at public auction, in which the public has an opportunity to buy the property, often times at a discount. If the home is not purchased at auction, the lender repossesses the property.

During that 9 months or so prior to auction, your landlord still owns the property. While your landlord owns the property, your lease is still legal and valid. Therefore it is important for you to continue paying rent, regardless of whether your landlord pays his mortgage with that money or not. If you are responsible for any other utilities, etc., continue paying those as well. You do not have to move out because of this foreclosure notice, and if you do, you will be violating your lease with your landlord. Only if you receive court-ordered papers with YOUR name on them, or an eviction notice, will you have to move out.

If the mortgage was wrote before the lease, the lease is usually terminated if the property goes into foreclosure. This is called "first in time, first in right," meaning that the mortgage takes precedent over the lease. The new property owner, or the lender, may decide to write a new lease for you at their discretion. However, a rental property with current renters is more desirable to purchase than one without, so you may have some luck there.

Signs that your landlord may be in foreclosure:

  • Advertisements coming to the house that offer services such as "we assist homeowners facing foreclosure" or "we want to buy your house, cash offers"
  • Unable to reach your landlord for long periods of time
  • Coming home to a padlock on the door
Advice:
  • Call your landlord if you receive any notices or signs that the property may be in foreclosure. They may be hesitant or unwilling to tell you details about it, as foreclosure can be an embarrassing financial hardship, but they also may be open and honest. It is always best to communicate.
  • Stay in contact with your landlord to make sure he/she is the current owner, so you know where you should be paying rent, or who to contact for repairs.
  • You can monitor the status of the home you rent and live in by using the service WatchIllinois. This online private eye service alerts you when new public records are filed on a property, person, or a business. Therefore, if you are uncertain if your rental is in foreclosure, the WatchIllinois service will let you know for certain, and also alert you if an auction date gets scheduled on the property. Check out WatchIllinois here

Posted On: May 2009

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