What happens to my security deposit if my rental is foreclosed on?

Get Legal Help Today

secured lock Secured with SHA-256 Encryption

What happens to my security deposit if my rental is foreclosed on?

I just learned that the house that I’m renting is being foreclosed on. I was served 2 weeks ago. I asked the landlord if I could use the deposit for rent this month and just go month-to-month. He said no, and he will start the eviction if I don’t pay him today. I have no problem paying him but I want to protect my deposit. What can I do?

Asked on August 17, 2011 Florida

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

First of all, until legal title to the property passes, your landlord is still the owner. Therefore you must continue to pay rent to him (whether or not he is paying is his mortgage). Otherwise you do in fact run the possibility of eviction. The fact is that you must be careful to find out just when title to the property passes at auction or otherwise. Former landlords have been known to try and continue to collect rent even after they no longer own the property. That having ben said, as the lawful occupant of a property in foreclosure, you should be notified by the mortgage lender as to the sale/transfer date of the property. After this time, the landlord will no longer be the legal owner. You will then be informed where to send your rental payments.

Regarding the return of your security deposit, unfortunately there may not be much that you can do. Typically, a tenant’s only legal recourse in a foreclosure situation is to sue the landlord in small claims court if it their deposit, plus interest, is not returned to them. And, even though they may be win in court, actually getting the money that they are owed may be much more difficult given the owner's financial situation.

Note: Federal law does however give some other rights and protections to a tenant in the event that their rental is foreclosed on. Tenants who have a written lease can continue to occupy the residence until the end of their lease, or 90, whichever is longer; unless the new owner wants to live there in which case a 90 day notice to move would apply. Tenants on a month-to-month lease or no lease at all, are given 90 days in which to move. Additionally, some state laws give even more protection.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption