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  • Feb 11, 2009, 02:17 PM
    Rentals in foreclosure
    This is a more and more frequently asked question in the current housing crisis. So I figured I'd post a sticky covering it.

    First we need to differentiate between renting a house and renting an apartment in a multi-unit building.

    In a multi-unit building, when the property is foreclosed, the outstanding leases will be honored. So the point is moot. The tenant continues paying rental as they normally do, until they are informed otherwise.

    However, in a house rental, the lease generally ends with the completion of the foreclosure. The new owner can then give the tenant notice to vacate. The tenant can delay this for a time, but eventually will be ordered by a court to leave. Courts are sympathetic to tenants caught in this situation and the tenants will be given a reasonable amount of time to find a new home.

    NJ is a recent exception to this. NJ law now requires the new owner to not only honor the lease, but renew it except under certain conditions, one of which being the new owner wants to occupy the property. (see this thread

    Under the law in almost all US states the tenant must comply with the existing lease until foreclosure is finalized. This means rent must continue to be paid and the tenant cannot break the lease (move out early) without permission from the landlord.

    The only exception I am aware of is in California where TITLE 6. RENT SKIMMING - Sections 890-894 - California Civil Code - California Code :: Justia permits a tenant, under certain conditions to cease paying rent.

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