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Originally Posted by Adak
... the tenants will have no losses...
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They will lose their homes within 3 months if they're month-to-month renters or if the new owner (the bank, initially) wants to occupy or re-purpose the property. The new owner has to follow eviction procedures and the tenants will have to deal with that, but in no way to they come out completely unscathed because this guy, for whatever reason, failed to pay the mortgage. That is certainly a loss, a financial, emotional and possibly social loss too, if they have no back-up plan. There doesn't even appear to be any stipulation to provide notice to tenants of a rental property, warning them the property they rent is in foreclosure.
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What Happens to Tenants When a Property is Foreclosed?
Tenants whose rented homes were the subject of a foreclosure almost always lost their leases before federal law, signed in 2009, changed the rules. Under current law, leases survive a foreclosure; the tenants can't be evicted unless the new owner intends to occupy the home -- in which case the lease can be terminated with 90 days' notice. Month-to-month tenants, who were always subject to termination upon proper notice, can now be terminated after a foreclosure with 90 days' notice.
Even if the lease or rental agreement can be terminated with the notice above, the new owner of the property must still follow state eviction procedures in order to remove a tenant from the rental unit. (To learn more about eviction procedures, read How Evictions Work: What Renters Need to Know.)
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