If a home sold at auction is occupied by renters who have a lease agreement with the previous owner, is the person who purchased the home at auction bound to that same agreement for the term of said agreement? If so, are there ways around this?
Can the new owner resell the home still occupied by the renters and just pass that lease agreement on to the buyer?
Hi Lisa,
It is my understanding that if the lease agreement was dated prior to the Notice of Default then the new owner would need to honor the terms of the lease. You could certainly sell the home with the tenants and transfer the lease agreement. It may be harder to sell since you would need to give the property notice to the tenants when you wanted to show the home and perform inspections. Typically most investors prefer to negotiate a cash for keys agreement when possible. This is where they can offer a cash incentive to move or essentially buy them out of the lease. I have see cash for keys agreements as high as $30k in special situations in order to insure that the tenants move by a certain date and do not do any damage to the property.
Sean , can you please clear up one point? I am slightly confused.
Your blog states that, “tenants are now entitled to stay through the end of their lease, and receive 90 days notice prior to eviction after a foreclosure.”
Does this mean that after the foreclosure, tenants can only be evicted a maximum of 90 days prior to the expiration of their lease? So if their lease expires in 6 months, I can’t even being the eviction process for 3 more months?
If the lease expires in 6 months, but I give them the 90 day notice now, then that wouldn’t be allowing them to stay for the full term of their lease…?
Check with counsel, but as I understand it the two items are separate. So you must give a minimum of 90 days notice AND they are entitled to stay until the end of their lease. I don’t recall anything that says those times can’t run concurrently.