What Happens If You Buy Property With A Tenant Living In The Property?
If you buy property at foreclosure, you may already be aware of some of the risks involved. Encounters such as liens that survive foreclosure or poor property conditions are both valid, common concerns. Another possible risk that buyers of foreclosed property don’t always consider is the property being occupied. What if there’s a tenant living there?
Oops–Missed the Tenant?
Tenants present a big problem for foreclosure buyers. Often, a tenant may not be named in a foreclosure lawsuit, and a lease or tenancy isn’t filed in any public record. This means that even if you do your due diligence, you could have never known that you were purchasing property with a tenant living in it.
Just because property was foreclosed on, and you bought that property, doesn’t mean that you have a right to evict the tenant. There are federal laws that protect tenants, which are similar to Florida’s laws, that provide a tenant rights to remain in the property.
Tenant Rights After a Foreclosure
The law states that you must allow tenants to stay either 90 days in the property after the foreclosure, or until the end of their lease. The latter is only applicable if there are more than 90 days until the end of the lease, and if you are not moving in.
If you are moving in, you can cut the remaining lease short and give the tenant only the 90 days.
Note that according to the federal law called the Protecting Tenants in Foreclosure Act. There was a Florida law that provided less time to tenants, but it is superseded by the 2018 federal law.
You must notify the tenant, in writing, of your intent to evict or end the lease early.
Does the Tenant Qualify?
Not all tenants get these rights. The tenant can’t be the person who was foreclosed on. Additionally, the tenant must be paying a fair rent, and can’t be a Section 8 tenant.
The lease must be a bona fide lease. For example, someone who quickly signed a lease before the property was sold just to stay in the house may not have a bona fide lease, nor may a relative of the person who was foreclosed on.
The Good and Bad
The good news is that even if your tenant must remain, he or she must continue to pay rent under the prior lease agreement, and that payment goes to you. Of course, if you weren’t planning to be a landlord, or worse, if you were intending on immediately moving into the property, you could have a problem.
Investors may see this in a positive light; you have a built-in tenant, and you may be able to generate a small income stream in your property as it (hopefully) appreciates in value.
If you are considering buying foreclosed property, you need legal help. We know the risks and pitfalls and can help you avoid them. Contact a Tampa real estate transaction lawyer at Gilbert Garcia Group, P.A. today.