We are living in a house that we recently found out was going into foreclosure. The owner has not made a mortgage payment in almost two years. We have been receiving legal documents explaining what is happening with the property however it is all very difficult to understand. The last document we received said there would be a court date on June 5. We are not sure if this is when the courts decide if they are giving the house back to the bank or what exactly is happening. When we moved in 4 months ago we did not have all the money for our deposit so the owner was willing to work with us. He told us we could pay $100/mo until we paid it. We paid for the first two months but then were served papers about the foreclosure. We told him that it really makes no sense for us to pay a deposit on a house that he probably wont own thru our lease. He agreed and told us not to worry about the deposit. That was last month. This month he is now saying he wants the deposit because we are legally bound to pay it because its in our lease. If he is losing the house in just over a month we know there isnt much he can do if we dont pay it. I know if we pay it we will never see that money again. We pay our rent every month on time although sometimes we feel like stopping. So does anyone know if this foreclosure process is coming to an end or if this will be dragged out for a while longer? Also, if anyone knows what happens after the bank takes over that would be helpful info as well. Thanks.
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There's actually a federal law that protects you now, which Obama signed into law in 2009. It's called the Protecting Tenants at Foreclosure Act of 2009.
If the new owner wants to move into your house, they have to give you 90 days notice. If not, you can stay to the end of your lease.
http://www.nolo.com/legal-encyclopedia/renters-for...
As far as the deposit goes, I believe he can't kick you out for failure to pay rent, if you pay the rent, but not the deposit. He may try and evict you for breach of contract, though. Then you can certainly argue it in court, as he's in foreclosure and you're unlikely to see that deposit money again.
I found another article regarding paying the rent and to whom:
No matter what state a foreclosed rental property is located in, it appears that a prudent course of action for tenants is to continue making timely rental payments. According to the Tenant Resource Center, a Wisconsin-based organization that offers free housing counseling, tenants should continue to pay rent to the original landlord until they receive written notice of a change in ownership. After that, tenants should make rent payments to the new owner or a receiver that is appointed in court proceedings. By continuing to pay rent, tenants will avoid the possibility of eviction on grounds that they breached their leases, and the PTFA will continue to apply to them. The Tenant Resource Center also suggests keeping written records of all rent payments.
Got it from here:
http://www.minneapolisfed.org/publications_papers/...
The new owner may offer you a cash buyout to move. Then it's up to you if you want to take it or not. But, it looks like as long as you keep paying rent, you're safe under the federal law.