Rental Guide for smart renters


What if my landlord is foreclosed on?...

We just found out that our rental building is going into foreclosure because of our landlord’s nonpayment of his mortgage. I am concerned about what happens now. Are we going to be evicted? What are the short- and long-term consequences for the renters? To whom do we pay the next month’s rent?

“The impact of a foreclosure by the building owner’s lender on residential tenants will depend on the status of the tenants,” said Howard Wenig, a Manhattan lawyer who represents property owners. If the tenants are rent-regulated, the lender’s foreclosure will not affect them. Their rent-regulated status insulates them from having their rights terminated.

However, if the tenants pay free-market rents, the lender has the right to name them as defendants in its foreclosure action, and their tenancies are subject to termination after a foreclosure sale. “During the foreclosure action and until a foreclosure sale is held, however, all leases remain in full force and effect,” Mr. Wenig said.

He noted that even in the case of free-market tenants, the lender may choose to let them stay in their apartments, unaffected by the foreclosure.

Tenants should continue to pay rent — to the owner, or to a court-appointed receiver if they are served with an order from the court advising that a receiver has been appointed. If a tenant is served with a complaint in the foreclosure action, or a copy of an order appointing a receiver, he or she should hire a lawyer to get advice on the best course of action.