What To Do if Your Landlord Goes Into Foreclosure

What should you do if you live in Washtenaw County and are in a lease with a landlord who goes into foreclosure?

The Scenario

In good faith you have signed a lease. One day you come home from work or classes and see a notice of foreclosure on the door.

First, don’t panic. According to Michigan law the mortgage company must post this on your door at least 15 days before advertising in the papers a notice of foreclosure.

After the 6 weeks of being posted publicly, the home must go to a sheriffs sale.  Michigan is a redemption state, this means that the homeowner has 6 months from the date of the sheriffs sale to “redeem” the property. Basically this means the homeowner must pay all fees and back mortgage payments.

The lease you have is valid until the redemption period ends.

Should you pay your rent?

That is a tough call, as the landlord has not been paying the mortgage but using your money. Technically the landlord still owns the property. Your lease is with them. One suggestion on the Michigan Tenant Organization suggests is to keep the money as the landlord could still bring and eviction case for non-payment of rent.

Security Deposit

Yes you are still entitled to getting your security deposit back.

In Ann Arbor, I have seen this several times. In good faith you signed a lease, paid the rent and come home to find a “notice of foreclosure” on your door.

If you are working with a Licensed Realtor, it is a good idea to have them prove they are current on the mortgage obligations at the time you sign a lease.

Many homeowners in the Ann Arbor Area have not been able to sell their homes, therefore, they choose to rent. Many times the rent is not enough to cover their mortgage payment and they get behind.

If they miss 3 months payments the mortgage company or bank will begin the process of foreclosure.

Your lease is valid until the 6 month redemption period ends.

If you need help in Washtenaw County contact Michigan Tenant Counseling Program at 734-761-8599

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Comments

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5 thoughts on “What To Do if Your Landlord Goes Into Foreclosure

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