Homeowners are not the only ones affected when a property enters foreclosure. If the property is occupied by renters, they will also be put out by the process, literally. Many renters find themselves without very little notice regarding the property’s financial standing until they get a notice on the door notifying them to vacate the premises. For a renter, the foreclosure process can be a scary and stressful time. Fortunately, there are a few things renters can do to minimize the effects of a foreclosure.
Not all renters will be forced out of a foreclosed property. For example, if the current owner decided to pursue a short sale to stop the foreclosure process, the renter may be able to negotiate a deal. The renter should request that the current owner and/or lender stay in contact with them about their current lease agreement. In some cases, the property could be sold to someone who would honor the current lease agreement and allow the renter to fulfill the remainder of the lease.
If the property is not eligible to be sold through a short sale or the lender continues the pursuit of foreclosure, the renter should begin plans to move out. However, this does not mean that they will be left without recourse. In most situations, a foreclosure would constitute an early termination of the lease agreement on behalf of the landlord, which leaves the renter with the negotiating power. A renter should be able to get all of their deposits refunded and may even be able to obtain some compensation for moving expenses.