A foreclosure protection strategy?

Rent it Right

Q: My landlord, who’s been a great guy, told me that he thinks he’s probably going to lose the property to foreclosure. My lease runs out in a couple of months, and I was hoping to stay here for at least another year. The landlord offered to renew the lease now, for as long as I want, because he says there’s a new law that makes foreclosing banks honor existing leases. If we do this, will it work? –Paul L.

A: Your landlord is correct about the new law. Signed by President Obama in May 2009, the Protecting Tenants at Foreclosure Act of 2009 requires foreclosing banks who become the owner upon foreclosure to honor existing leases. If someone buys the home at a foreclosure sale intending to occupy it, however, the new owner can terminate the lease with 90 days’ notice. (Incidentally, for month-to-month tenants, both the bank and any new occupying buyer have the right to terminate the rental agreement, but must give tenants 90 days’ notice.)