The answer to the question above is yes. Landlords are legally allowed to rent out pre-foreclosure properties. They can continue to rent out their house to their current tenants and they can bring in new tenants as well. However, foreclosure brings with it unique stipulations that landlords have to consider when renting out their property. Consult with a Miami attorney if any landlord tenant disputes arise. Otherwise, here is some advice to successfully rent out a property going through foreclosure.
Being upfront with tenants is always the best course of action. Current tenants need to be informed that the property they are renting is in foreclosure, as well as incoming renters. Landlords should formally disclose this information to occupants by providing a Notice a Default at the onset of the foreclosure process. Keeping everyone in the know prevents surprises, such as on the rare occasion tenants get served with foreclosure summons, they will understand why. It can also serve to protect landlords from violating a renter’s rights, as it is the case in some states.
Unless the landlord signed an Assignment of Rents clause, also called a 1-4 Family Rider, when he signed the mortgage loan, he is entitled to collect rent until the foreclosure sale. If an Assignment of Rents was signed, the mortgage lender is allowed to collect rent from a landlord’s tenants directly. Landlords who can collect rent on a house in foreclosure should charge slightly below market rent. And if they want to bring in new tenants, they should consider offering short-term leases or a month-to-month rental.
When a rental property goes into foreclosure, landlords do not only have a responsibility to themselves but also to their tenants. Foreclosures can gravely affect both sides; landlords could lose a valuable investment and renters could lose their home. In situations like a rental going through foreclosure, landlords should strive to be as transparent as possible. This can prevent misunderstandings and disputes.
However, if a dispute were to arise a Miami attorney specializing in landlord tenant disputes can represent you. Call the team at Graham Legal today so we can advise you of your rights as a landlord and of the best course of action.