Tenants must avoid rent a house in foreclosure process

Potential tenants planning to rent a house that is undergoing foreclosures should think twice and not become a fool by rushing into it. The lenders of course cannot kick out the tenants as they have to respect the terms of the lease agreement. But that does not exclude the chances that toughs would stop from scaring the tenants.

From 2007 July Sandra Pearson has been residing in a townhouse located in Santa Maria, California as a tenant with her teenage son who suffers from epilepsy and autism. She is a single mother. Last October a vacating notice was served on her by the servicer – First Federal Bank. The original owner had lost the house to foreclosure.

Pearson showed them her lease agreement that allows her to stay till 2010 June and also produced her current rent receipts. She was given the impression that the matter had been solved. But last December when First Federal collapsed it was taken over by OneWest Bank.

It meant the townhouse of Pearson was also taken over. They refused to accept her rent cheque when she went to pay for the same. They threatened to take court action against claiming that her lease was not legal. Person lamented, “They scare the wits out of you.”

In the end OneWest allowed her to complete her lease term although the bank insisted that the documents were not in order.

Under an act (Protecting Tenants at Foreclosure Act) that the Congress had passed in May 2009, tenants similar to Pearson are qualified to stay on even after the unit has been foreclosed upon. The condition is that they must have a valid lease and are current in their rent payments. Even those tenants who have signed month-to-month agreements are allowed 90 days time prior to leaving.

But the advocacy groups championing the cause of the tenants contend that the lenders and their representatives like some scheming realtors have been taking advantage of the ignorance of the tenants. They are putting pressure on the tenants by dispatching them misleading correspondence that sometimes compel them to move out even when they are within their rights not to do so.

The instance of one such letter sent by a legal firm of Texas read, “This letter constitutes formal and final demand that you vacate the premises within three days [emphasis ours] of the date this letter is delivered.”

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