Tenant Occupancy and Foreclosure

Tenant Occupancy and Foreclosure. How long can I stay?

Question:

Are there new state and/or federal laws affecting tenant occupancy of rental property after a foreclosure sale?

Answer:

Yes. Both Washington State and the United States recently created new law addressing a tenant’s right to retain occupancy of housing after a foreclosure sale. The Washington law took effect July 26, 2009. The federal law is effective immediately. Both laws will impact a buyer’s ability to occupy real property purchased at or immediately after a foreclosure sale.

Under the Washington law, any residential tenant occupying property at the time the property is foreclosed must be given 60 days written notice before an eviction can occur. During this 60 days, the only reasons landlord could expedite removal of the tenant would include tenant committing waste to the property or creating a nuisance. Under the new federal law, a residential tenant in property that is secured by a federally-related mortgage loan is entitled to retain possession following foreclosure for the duration of any bona fide, written lease agreement. If there is no written lease agreement or if the lease is for a month-to-month tenancy, then the tenant must be given 90 days notice before being evicted. During tenant’s occupancy following foreclosure, however, the tenant’s occupany is subject to the terms of the lease agreement. In other words, tenant will be required to perform tenant’s obligations under the lease. The exception to this federal law is that if buyer intends to occupy the property (as an owner-occupant), then buyer must only give tenant 90 days notice of termination of tenant’s occupancy rights and any lease rights in excess of 90 days will be terminated.

 

The preceding is an opinion from Annie Fitzsimmons, the attorney who answers questions for the Washington Association of REALTORS® Legal Hotline. For additional questions or information, please contact Jen at (206) 293-1005 or send me an email to jen@hudsoncreg.com.

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