A Florida Tenant's Guide to Foreclosure

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Updated August 12, 2008.

[Note: If you still have questions after reading the article below, KLG now offers flat fee consultations for answers to your situation. Please see the bottom of this page for details or call (305) 808-7300.]

If you are reading this, you probably have discovered the house or condo you rent (the “property”) is in foreclosure. You may have been notified because a process server gave you a copy of the foreclosure lawsuit or posted a notice on your door. If so, consider yourself fortunate because increasingly more tenants are first finding out when the Sheriff arrives to change the locks and clear the property.

Many unscrupulous landlords will continue to collect their tenant’s rent payments, even though they know eviction is inevitable and just a few weeks to months away. For those tenants, the shock of being forcibly evicted combined with the apparent loss of their security deposit and last month’s rent money, causes anger, embarrassment and rudely disrupts their lives. Students, families, retirees – no one is immune from this risk, but with a little knowledge and some determination you can keep from becoming a victim and minimize the disruption this event will have on your life.

The information below is being provided as a public service to help educate those tenants who have just found out their property is in foreclosure. As a tenant of a property in foreclosure, you have limited options to stop your eviction. However, you do have some options to delay the actual eviction date, which can give you enough time to find a new place and get back on your feet. To start, let’s do a quick overview of what foreclosure is and how it works.

Simple Overview of the Foreclosure Process

Foreclosure is the name of a lawsuit filed by a bank when a property owner stops paying their mortgage. In a foreclosure lawsuit, the bank asks a judge to order the property to be sold at public auction. This process, from filing to auction, takes about 4-6 months. At the auction the bank gets an automatic bid for the amount owed. If no one bids higher, then the bank gets the property, free and clear of anyone else’s claim. This transfer breaks the lease between owner and tenant. The bank now owns the property and typically the first thing a bank does is ask the Sheriff to clear the property and change the locks.

As a tenant, there is practically no way to stop the foreclosure lawsuit and auction.

So what can a Tenant do?

There are limited tenant rights when foreclosure happens. A Tenant really has only two options – move out before eviction or delay the foreclosure process. If you can move out without much difficulty, then by all means do so. But most people simply can’t move on short notice and without the money needed to sign a new lease. For them, delaying the foreclosure process is their only option. To delay you either need the bank’s attorney to agree to delay the auction or ask a judge to do so.

Calling the Bank’s Attorney

The phone number and name of the bank’s attorney is listed on the foreclosure complaint and on the lis pendens. When you call, be polite and respectful. Being angry about the situation can only hurt you. After all, it is not the attorney’s fault the property is in foreclosure and they are just doing their job. Tell the attorney how much time you need to delay the foreclosure auction. Having a good reason (finances, family issues, travel plans) helps a lot. Ideally they will understand and delay the auction. But realistically, this is a 50/50 shot – sometimes foreclosure attorneys do not have the authority to grant any delay and even getting one on the phone is difficult as they handle hundreds of cases and cannot attend to every call.

Delaying Foreclosure

For ease of presentation, let us break the foreclosure process into three different phases: the filing of the foreclosure; the auction of the property; and the eviction of the tenant. By determining which phase you are in, you will be better able to choose a proper course of action in postponing or eliminating eviction.

Phase 1

Phase 1 is what we call the period from the filing of the foreclosure until 30 days before the auction. There is nothing really to do at this point, because the auction and eviction dates are unknown. One thing a tenant should check is if the property’s mortgage was recorded after the lease was signed. If so, the lease actually survives the foreclosure auction, and you will be able to remain in the property until your lease ends. While this is usually not the case, it does happen. To see if this applies to you, look at a copy of the foreclosure complaint you received or that was filed with the court. The mortgage will be attached and the date it was recorded should be on the first page near the top.

Phase 2

Phase 2 starts 30 days prior to the foreclosure auction and ends at the actual auction. At this point, a tenant’s best strategy is to try to delay the auction. By delaying the auction, you in turn delay the eviction thus ending up with more time for you to stay in the property. This can be done by filing a “Motion to Delay Auction” with the local circuit court. A judge must approve this motion and the better your reason, the greater you chance of success. Examples of good reasons are: you were unaware until now the foreclosure was pending; you have a work/family emergency that requires your attention and thus cannot properly respond to the foreclosure lawsuit; you do not have the money saved yet to rent a new house/condo; recent job loss; recent health issues; you are a senior citizen with limited mobility; you are disabled/handicapped. Even if none of those apply, you can always request leniency from the court, and a judge may agree to delay the auction to give you more time to move out. When you file your motion, ask the judge’s chambers to schedule a hearing date and you should mail a notice of hearing to the bank’s attorney and your landlord. Be sure to dress appropriately for the hearing and be respectful to the judge. Calmly explain your situation and chances are good the judge will give you additional time.

Phase 3

Phase 3 is the period between the auction and the eviction. A couple weeks after the auction a Sheriff’s Deputy will come to the property and post an eviction notice. Once an eviction notice has been given, you will usually have only 48-72 hours to pack and leave. You do not have much time and need to act quickly! In Phase 3 you have two options to delay eviction. Option #1 is to file a Motion to Extend Sheriff’s Execution. If granted by the judge, this will prevent the Sheriff from returning to evict you for a period of time, usually at least 30 days. Option #2 is to call the REO Agent and ask for “cash for keys.” This is exactly as it sounds; the REO Agent will compensate you for having to leave the property before the end of your lease. When you leave the premises, you will receive a set amount of money provided you leave the premises clean and in good condition. You can expect between $250 to $2,500 for this, depending on the property value, what you agree to leave behind, and the resources of the REO Agent.

Forclosure is disruptive for a tenant. However, armed with a little knowledge, you can handle it on your terms and minimize the problems. Hopefully you find this information useful. If you have any suggestions for information you think should be added during future updates, please contact us at 305.808.7300.

Still have questions? Need legal advice on what to do next, whether to pay rent or how to recover your deposits? If so, contact us for a one-hour telephone consultation regarding your specific situation. There is a $200 fee for this consultation. Come by our office, email or call us - get your answers today!

Media Articles

Hernando Today: Foreclosure Brings Blues to Renter

http://www2.hernandotoday.com/content/2008/jul/19/ha-foreclosure-brings-blues-to-renter/

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