Do we have any recourse when the house we are renting is foreclosed on?

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Do we have any recourse when the house we are renting is foreclosed on?

We have a 1 year lease and paid deposit. The management company did not pay the mortgage and now the house is in foreclosure. The management company took rent for a month when they no longer had legal possession. They also have our deposit money. Is there anything that we can do to recoup money?

Asked on November 10, 2010 under Real Estate Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Legally, you are entitled to your security deposit back. Also, they should not have been paid rent when they were no longer the owner. You could sue for the return of these monies, but that's effectively your only recourse. Unfortunately, sometimes rental units or homes are foreclosed on, and when they are, unless the tenant can show that fraud was involved (e.g. the landlord knew he was in default when the lease was signed, but knowingly withheld that vital information from the prospective tenant), there is usually no other right of recovery. Under some new (since '09) laws, you probably will have at least 90 days, and possibly longer, before having to move out, which gives you some time to find a new situation, but that's about the only bright spot.  Below is a link to a press release with some information on the subject: http://www.whitehouse.gov/the_press_office/Reforms-for-American-Homeowners-and-Consumers-President-Obama-Signs-the-Helping-Families-Save-their-Homes-Act-and-the-Fraud-Enforcement-and-Recovery-Act/


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