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Tenants in Foreclosed Properties

Contents

    Your rights and responsibilities as a tenant do not change if the home you're renting is foreclosed. To learn more about your rights, read Tenant Rights and Responsibilities. Read this article to learn about being a tenant during and after a foreclosure.

    Finding Out About the Foreclosure

    You may learn about the foreclosure from a notice posted on your home advertising a sheriff’s sale. This is not an eviction notice. This notice is required by state law to tell you and your landlord the home will be up for auction if the landlord does not pay off the debt on the home. Tell your landlord about the notice.

    How Foreclosure Happens

    If your landlord defaults on a mortgage loan and doesn’t work something out with the lender, the home may be sold at a sheriff’s sale. The buyer is usually the lender, but not always.

    After the sheriff sale, there is a redemption period. During that time (usually six months) your landlord can stop the foreclosure by paying the sheriff sale price and some costs. The buyer won’t own the property until the redemption period has ended.

    Paying Your Rent

    Continue paying rent to your landlord after the notice is posted. Your landlord still owns the home and can evict you if you stop paying. Your landlord’s responsibility to maintain the home continues until the redemption period ends.

    Ask your landlord for details about when the buyer will take ownership of the home. After the buyer has ownership of the property, you owe your rent to the buyer.

    Your Security Deposit

    Before the buyer takes ownership of your home, you should ask your old landlord about your security deposit. Your security deposit is legally your money unless it needs to be applied to unpaid rent or repairs.

    Your old landlord can either refund the money to you or transfer it to the new owner. If your old landlord returns it to you, you might have to use it as a security deposit with your new landlord. Your old landlord should mail you notice if it’s been transferred to your new landlord.

    To learn more about your rights regarding your security deposit, read Your Security Deposit: What It Is and How to get it Back.

    After the Foreclosure

    In Michigan, foreclosure laws have changed during the past few years. From 2009 to the end of 2014, a lease continued after the buyer took over as the new landlord. Some new owners of foreclosed properties may still follow these guidelines, even though it's no longer law.

    Legal Help

    If either your old or new landlord doesn’t keep your home in good repair during and after foreclosure, you may want to seek legal help. Visit the Michigan Foreclosure Prevention Project’s Partner Programs to contact a legal services office in your county. You can also use the Guide to Legal Help to find lawyers and legal services in your area.