Renter gets foreclosure notice: What now?

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by Diana Zoga / News 4

KMOV.com

Posted on October 10, 2012 at 10:43 PM

Updated Thursday, Oct 11 at 11:47 AM

(KMOV.com) -- Less than two months after moving her family into a new home, Shirley McCoy received a letter in the mail, telling her the home was in foreclosure.

McCoy signed a one year lease and paid her landlord a $700 deposit in August. She says her landlord never told her the home was in danger of going into foreclosure.

The sale date is set for October 16th and McCoy says she started to panic, assuming she'd have to move and incur all the expenses that come with it.

"I don't know... it did something to me. It just stabbed me in the heart," said McCoy.

But, the law is on McCoy's side.

The Protecting Tenants at Foreclosure Act of 2009 gives tenants at least 90 days from the date of the foreclosure sale to move out if the tenant wants to move.

"The lease survives the foreclosure sale," said Susan Alverson, Managing Attorney for Legal Services of Eastern Missouri.

Renters can also choose to stay in the home through the duration of the lease. There may be a few exceptions and there's a chance the new owner (who buys the property in the foreclosure sale) will offer a cash incentive for the tenant to move out before the lease is over.

Tenants, however, are not required to accept a cash offer.

"You still have to honor that lease unless the tenant living there doesn't want to and you all negotiate something different, but the tenant is the person in power in that case," Alverson explained.

Alverson adds many tenants may not be aware of their rights and receive misinformation in the foreclosure process.

"All it means is that the owner is going to lose ownership, but it doesn't mean, at all, that the new owner has a right to just set them out."

McCoy's landlord told News 4 that he, too, was caught off guard by the foreclosure. He says he expected to work out a deal to keep the home, which is why he leased it to McCoy.

So, what happens to the $700 deposit if McCoy wants to move out?

Alverson says McCoy has a separate claim and should demand the money back from the landlord.
 

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