Most of the time people are expected to leave their property after a foreclosure. However, depending on the state, that may not be necessary. There might be other options available such as remaining in the house or even buying the house back from the bank. It helps to know about all the options available following a foreclosure.
When you stop paying mortgage payments and the bank initiates the process of foreclosure, you are allowed to remain in the house until the process completes. In most cases, you will have a grace period during which you will be allowed to remain in the house. However, once the foreclosure is final, ownership of the house shifts to the bank or whoever buys the property and you’ll be expected to leave the property.
Sometimes a new owner is interested in renting out the property. You can take advantage of this opportunity, especially if you have not yet found a new place to live, by becoming the tenant. But get your heart set on this being the case–in the majority of the cases. The owner wants to take possession of the house as soon as possible.
There are situations when the landlord is forced to foreclose on the property you’re renting. As a tenant, this will have a negative impact on you as well. Once the foreclosure is final, you might receive an eviction notice despite not fulfilling the total length of your lease.
More often than not, you’ll have around 90 days to vacate once the home goes into foreclosure. You also will be able to ask your landlord to reimburse you for relocation costs or sue for moving expenses.
You may be pleased to know that it is possible to maintain ownership of your house even after a foreclosure. Under the “right of redemption,” owners are allowed to buy back their house within a certain period called the “redemption period” and remain in the house until the redemption period expires. Homeowners can live in the property for free during the redemption period. But will have to pay either the foreclosure sale price or the amount owed to the lender.
By staying in the house during the redemption period. You’ll be able to save money that otherwise would be spent on rent and other bills.
What if you are not ready to move out after the foreclosure sale date? Well, you run the risk of the new owner taking legal action to evict you from their property. You would receive an eviction notice and failure to comply could result in your arrest.
Non-compliance with the eviction notice could also damage your credit score and make it tougher for you to secure future loans. Your future ability to rent the property would also be damaged should you choose to violate an eviction notice following a foreclosure.
Sometimes new owners extend a “cash-for-keys” deal to encourage tenants to vacate the property. In this deal, tenants are expected to leave the property at a given date in good condition and, in exchange. The new owner pays the tenant money when he or she turns in the keys to the property. This arrangement is not standard nor is it required for a landlord to offer such an arrangement if the property is under foreclosure. But it doesn’t hurt to ask the landlord to consider it.
Understand that whatever you decide to do after the foreclosure sale date is going to have an impact on your credit and rental history. If you are in the middle of a foreclosure or are expecting to be in foreclosure soon. It’s good to know your available options and have a plan for where you’ll go once the foreclosure is final.
It is highly recommended that you consult with an attorney and discuss the unique circumstances around the foreclosure of your home. It would be even better if you spoke with a lawyer with experience managing foreclosures.