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What Happens When a Rental Home Goes into Foreclosure?

Todd Breen - Tuesday, July 19, 2011
When this resident moved into her West Palm Beach rental property three years ago, the owner was current on his mortgage payments. As she relates in the video, she loved living in her professionally managed Palm Beach home, so when her lease came up for renewal, she stayed for two more years. Seven months ago, however, her world changed...

The Foreclosure Notice

Coming home to find a "John Doe Tenant" letter taped to the front door can be unnerving. The first response is often fear or panic, but it doesn't have to be that way if you're renting a professionally managed Palm Beach County rental home. When a property we manage goes into foreclosure, most of the time we are able to continue managing the property, taking care of minor repairs and maintenance.

How Long Does a Foreclosure Take?

Each situation is different, however from the time the tenant gets notice of a foreclosure it will usually take 6 months or longer before the foreclosure is finalized. Some of our South Florida foreclosure rentals have been in foreclosure for more than two years, while our residents continue residing there!

Will I Be Required to Move Out?

Until recently, banks would get immediate possession of a property when the foreclosure was finalized. When President Obama passed the "Save Our Homes" act, it gave most tenants the right to complete the term of their lease. Lately banks have been open to allowing tenants to continue renting the property, or will offer 'cash for keys' - an offer to pay the tenant to move and leave the property in good condition. And although we haven't seen it happen at our company, sometimes a tenant will be required to move with 30-60 days notice after the foreclosure is finished.

What Happens to My Security Deposit

If you're renting from a private landlord and your South Florida home is foreclosed, it may be difficult to get your security deposit back! At Home Property Management, we generally hold the security deposit in our company real estate escrow account, safeguarding it for you! As you can see in the above video, this resident was handed a full refund of her deposit when the bank took over the property. While we can't always guarantee this will be the case in every situation, more often than not we refund the security deposit to the resident.

How Can I Know if a Property is Going into Foreclosure?

Whether you're considering renting a property, or renewing the lease at your home, there are some simple steps you can take to learn if a property is in default. First, you can ask your agent to do a Liz Pendens search in the Multiple Listing Service. You can also ask the homeowner for a copy of their most recent mortgage statement.

How Can I Learn More?

It's easy! Just scroll down and "Speak Your Mind", asking any questions you want or contact us for more information.
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