When you sign a lease and rent a home or condo here in Florida, you may or may not meet the actual owner of the property. Maybe you schedule an appointment to meet with the owner’s representative so you can check the place out and rent your new home.
False Sense of Security Dealing with Owner’s Representative
Tenants often deal with the apartment complex manager or the real estate agent that has a property management agreement with the owner. It’ s not necessary for the tenant to see the owner face to face if the owner has contracted with someone to act on his or her (or its) behalf. Landlords do not have to own the home, condo, apartment, or townhouse in order to rent it.
For many tenants, this may provide a false sense of security over their ability to stay quietly in their rented home. If they’ve dealt with a reputable property management company, or a real estate agent with a known brokerage, then they may think that they have are safe from an unreliable property owner.
That’s not accurate. Many Florida tenants have been shocked to find they are forced from their homes because the owner has gone into foreclosure on the rental property – despite the owner’s agent being so professional and reliable.
Would you know if the owner of your condo was behind on mortgage payments?
Renter’s Rights in a Florida Foreclosure
When an individual or a company gets into financial straits, the mortgage payment on the rental properties may be among their first defaults. Renters are not privy to the financial conditions, or financial hardships, of the owner.
Banks and lenders may be instituting collection efforts for unpaid mortgage payments on the rental property while the tenant is prompt with each month’s rent payment.
The first time that the tenant may have any knowledge that there is a problem with the owner getting behind on the mortgage payments for the rental property is when the renter gets a formal copy of a foreclosure lawsuit that has been filed by the mortgage lender against the defaulting borrower.
The tenant will get a copy of the official lawsuit, filed down at the county courthouse that will be served on the tenant by the County Sheriff or a local process server. This can be a very scary thing!
In the lawsuit, the tenant will be a named party. They may appear as “unnamed tenant” or “unknown tenant” or as “John Doe, tenant” – but legally, they are a part of the foreclosure lawsuit because they are leasing the property.
Leaseholds are property rights in Florida. The bank must include the person leasing the property subject to foreclosure in the foreclosure lawsuit because under the law the renter is a “necessary party.”
Filing an Answer in the Foreclosure Lawsuit
As a party that has been served in the lawsuit, the tenant needs to file a formal response. If the renter does nothing, then legally he is waiving his rights.
What should the tenant do that has been served with a foreclosure lawsuit filed by the bank regarding the rental property? He or she should file an “Answer” to the “Complaint.” The tenant can do this “pro se” (by himself) or he can hire a Florida real estate attorney to help.
The following information needs to be included in this formal document:
- Your name;
- Your contact information;
- Explanation that you live in the property subject to foreclosure;
- Explanation that you rent in the property subject to foreclosure;
- Details about the terms of your lease (date signed, parties who signed the agreement, when the lease ends); and
- A complete copy of the lease agreement as an attachment.
It’s vital that the tenant file this “Answer” so that (1) the judge is aware that someone lives in the rental property that is the target of the foreclosure lawsuit; and (2) you will be formally notified of hearings and deadlines and other Orders of the Court that apply to the case.
The way that the renter knows what is going on in the foreclosure lawsuit is by filing that Answer, so that the Clerk and all the Parties are procedurally required to give him legal notice.
Moving Because of Foreclosure
Once a tenant is aware the owner is behind on the mortgage payments, that fact alone that may be enough for him to begin looking for a new place to live.
After all, if the owner doesn’t have the money to pay the mortgage payment then how likely is that owner going to keep up with repairs or maintenance on the home or apartment?
Here, the tenant needs to check with their Florida tenant’s rights lawyer. It’s possible that the renter may be able to terminate the lease agreement based upon the foreclosure lawsuit. Florida law and the lease agreement terms will give the details on how and when this is done.
The tenant can continue in the rental property under the terms of the lease agreement until the foreclosure lawsuit is finalized or earlier, if the tenant terminates the lease agreement.
Forced to Move Because of Foreclosure
Tenants with lease agreements can look to their lease provisions. If the tenant does not have a formal lease agreement, or is otherwise living month to month in the home or apartment, then the tenant is more vulnerable to being forced to move when a foreclosure has been filed and the judgment is entered.
Either way, the tenant can be forced to move. This is because the official ownership of the property has changed and title has transferred.
How? Once the judgment is entered in the foreclosure lawsuit, there will be foreclosure sale. The residential property will be sold at auction. Maybe the bank buys it; maybe a third party buys it.
The purchaser owns the property and has the legal rights of a property owner. Title is transferred. The purchaser may want the tenants to move out, so the property can be evaluated for resale.
For some renters, there are reasons why they want to stay in the rental property as long as possible. Maybe they need to save up for moving expenses. Maybe they are elderly, or have kids in school.
Whatever the reason, some tenants in Florida may find themselves dealing with official actions forcing them to move from their rental home despite their need, or want, to stay.
The new owner, who has legal title, may decide to evict them.
Again, in these situations, it’s important to check with a Florida tenants’ rights attorney to learn how best to protect your interests in these situations. There are laws that can help.
Florida Statute 83.651
Today, a state law exists to protect tenants who are renting foreclosed homes, condos, or apartments.
A federal law called the “Protecting Tenants in Foreclosure Act” died by its own terms on December 31, 2014. It’s not good law today. (So if anyone advises you according to the terms of this old federal law, watch out!)
The Florida Legislature has passed Florida Statute 83.651. It deals with “termination of rental agreement upon foreclosure.”
This law does not mean that tenants get to stay in their rental home. It does make sure that the tenant gets official notice, protection from bad acts by the new owner, and four weeks to find a new place to live.
- at the foreclosure sale, the purchaser of the rental property takes title to the residential premises subject to the rights of the tenant;
- the new owner cannot do anything in violation of Florida Statute 83.67 (like turning off the utilities, etc.);
- the purchaser can issue a written 30-day notice of termination of the lease agreement;
- the tenant can legally live in the rental property for that full 30 day period;
- the written notice of termination of the lease must follow specific language as it is given in the statute; and
- if the tenant fails to move after the end of the 30 days, then the new owner can start formal eviction proceedings.
Negotiating to Stay With the New Owner
If the tenant wants to stay in their home, then it may be possible to negotiate a new lease if the tenant can convince the new owner it’s a good deal.
Florida Statute 83.651 allows this. Under its subsection (4), the purchaser at the foreclosure sale can “assume an existing rental agreement” or “enter into a new rental agreement” with the tenant.
If the purchaser is not the bank, then the tenant will need to investigate why the purchase was made. Do they want to renovate the place and flip it? Do they want to live in it? Do they want to keep renting it?
What if the bank bought the property? The reason that the bank wants to move renters out of foreclosures is because the bank isn’t in the rental business. It’s in the money business, and foreclosure was done only to minimize financial losses after a mortgage loan defaulted. How is a new lease going to help the bank?
Before finalizing anything with the new owner, the tenant should make sure that there truly has been a transfer of legal title and that the bank or third party purchaser has full legal ownership of the foreclosed rental property.
For more details, read:
How Do You Know If The Chain Of Title To Your Florida Real Estate Is Clear?
Ocwen Filing Bad Foreclosure Lawsuits: Is Ocwen Servicing Your Mortgage?
Florida Foreclosure and Tenants’ Rights Lawyer
When you face getting notice of a foreclosure action in Florida where the lender is foreclosing on your rental home, then it’s important that you act fast to protect your legal interests. Maybe you will have to move, maybe you won’t.
There are legal protections available to you that a Florida foreclosure defense attorney experienced in Tenants’ Rights can explain to you. Each case is unique.
- You may need to file an Answer in the Foreclosure Lawsuit as well as decide on termination of the lease agreement or negotiation of a new lease with the new owner.
- You may need to protect yourself against bad acts in the duration – things like making sure no one changes the locks or cuts off the utilities, and getting damages if this does occur.
If you have questions or concerns about a pending or possible foreclosure matter on your rental home, then feel free to contact our offices. We offer free initial consultations to help you decide what course of action is best for you.
