Renters and Foreclosure
If you’re renting a home that goes into foreclosure, state laws offer you some protections.
Your Rights under North Carolina Law
- If your lease is entered into and recorded at the county Register of Deeds prior to the mortgage, then the mortgage holder and foreclosure buyer are required to honor your lease.
- If your lease is recorded at the county Register of Deeds, you’re entitled to receive notice of a foreclosure hearing.
- If you rent a house or an apartment in a complex that has fewer than 15 units, you’re entitled to 20 days advance notice of a foreclosure sale, by first class mail. This notice should also state that if you entered into or renewed your lease on or after October 1, 2007, you have the right to end your lease by giving your landlord 10 days written notice.
Consider the following tips to help avoid trouble if your landlord goes into foreclosure:
- Get a written lease. While verbal leases are enforceable under North Carolina law, a written lease makes it easier to prove that you have a bona fide lease.
- Record your lease at the local Register of Deeds office. This will provide a record of the lease. Keep copies of your lease and other important paperwork in a safe, easy to find place.
- Look for warning signs. Pay close attention to notices posted on apartment bulletin boards and watch for signs that the property owner may be in financial distress, such as failure to perform regular maintenance or make repairs.
- Keep your eye out for local bankruptcy listing. Some local newspapers print lists of bankruptcies. Be sure to check them out if you suspect your landlord is in trouble.
- Don’t violate your lease. Even if you receive a notice of foreclosure, don’t stop paying rent or adhering to other rules outlined in your lease. Just because your landlord goes into foreclosure doesn’t mean you’re off the hook for paying rent.
- Remember your security deposit. A landlord facing foreclosure will likely have spent your security deposit. Your best chance to recover your deposit is to try to work out an arrangement with your landlord. A second possibility: if the money is held by a real estate company, ask the company not to release the funds until the foreclosure is resolved.
- Negotiate with the mortgage company. Once the property has been sold and reverted back to the mortgage company, you’re free to try to negotiate with them. Options include making the monthly payments, signing a new lease, or even offering to purchase the property.
- You may still be asked to move. Some mortgage companies want the property vacant even if you’ve provided proof of a legitimate lease. In exchange for the renter agreeing to vacate early, they may offer money to cover your moving expenses, usually $1,000 to $2,000.
We Can Help
If you have questions about your rights as a renter during foreclosure contact us for help or call toll free within North Carolina 1-877-5-NO-SCAM.