A female friend of mine’s apartment complex apparently has gone into foreclosure & the landlord seems not surprisingly to have disappeared so what might happen now to the residents? After all it’s not there faults the complex failed.
Sell and Rent Back
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{ 6 comments… read them below or add one }
i think u are forced to moved out
i dont know i would think they would find you a new place to stay if the apartment closes but sometime they dont and they will keep it open so that no one will be out on the streets
youre pretty much asked out baby :), but by law you have thirty days to move, and Im sure that it will be atleast 30 days before they actually forclose the property
The bank will either honor the duration of the lease and then ask them to move or offer them cash to break the lease and hand over the keys.
The way it works when a new owner purchases a rental property (or a bank forecloses on a rental property) is that the new owner or bank can evict the existing tenants, honor the current lease, or require the tenants to enter into a new lease (including a rent increase) if they want to stay.
If I were the bank that was foreclosing, I would notify the tenants of the imminent foreclosure and inform them that they are subject to eviction if a new buyer wants them all to move out. Or, that they would be subject to negotiating a new lease with the new owners if they chose to stay on. The reason I would keep them all on is that it might make the property more valuable to a prospective buyer to know that they already have tenants and not have to go through the process of securing new tenants.
But, someone who buys the apartment complex might want to renovate the place, so they can charge more for rents. And, in that case, they would want everyone to move out. And, there’s nothing the tenants can do about it.
Whether or not your friend, or anybody living in a true apartment building in foreclosure, can be forced to move depends almost entirely on which state and county the property is located in.
Apartment rentals are a highly regulated business in many states and counties in the USA; here in California, in the city of LA we have rent control (which sucks for landlords) on buildings that are 2 or more units.
So a bank, or lien holder, cannot foreclose and evict tenants in a rent control building. Other wise it would be a great loop hole to clear out a building of low paying rent control tenants without having to pay relocation fees to them (quite expensive).
For the most part, tenants in a real apartment buildings do not face being evicted if the property is foreclosed on. The loans made on these kinds of property are made subject to the exiting tenants and leases (which must still be honored). The banks know this and they review all the leases and rental contracts before they make loans on Apartment buldings.
Remember, we are talking about loans made on Apartment buildings and not home loans, they are not the samething, there is a little bit of cross over when you talk about 2-4 units that can qualify for a home type loan, that gets very spcific on wheather or not the owner claimed to live in one of the units.
So your friend should be ok if they have a lease or rental agreement, if they are on a month to month, they can be asked to leave with 30 or 60 day notice but then they could be asked to leave by any owner at that point if that is the case (providing the the property is not under some kind of rent control), the foreclosure would make no difference.
In the end what counts is what the tenants are paying, if they are paying close too or at market rate rents, no owner will want to get rid of them; they all want that rent money.
If the Bank or new owners feel they are paying way too little rent, then they will either raise the rents or ask them to leave so they can get more rent for the units, if they can legaly do so.
Under the terms of most rent control laws, the bank or new owner is stuck with the exiting tenants and rents, they can not arbitrarly raise the rent or evict them without cause; like not paying the rent or selling drugs out of the unit.