1 Tenants Rights in Foreclosure Updated June I just found out my rental is in foreclosure, what should I do? You should first determine the type of foreclosure. There are two types, one with court involvement called a judicial foreclosure, and one without court involvement called a non-judicial foreclosure. In a judicial foreclosure a court case has been filed and you should receive a court summons. In a non-judicial foreclosure, there has not been a court case filed and instead of a summons you should receive a written notice of trustee s sale. Oregon law has specific protections for tenants in non-judicial foreclosures. The first thing to do when you receive notice of a trustee s sale is to notify the bank or person foreclosing that you are a renter at the property. You should send a copy of your lease agreement or month to month rental agreement to the address listed in the notice of trustee sale. If you do not have a written agreement with your landlord, you can send things such as rent receipts, to prove that you are a tenant. You should also send a copy of sample letter 1 attached to this flyer with your agreement. This will let the bank or person foreclosing know that you have the legal right to live at the home and that they must serve you with the notices discussed in question 3. Keep a copy of the paperwork you send. The protections for tenants in judicial foreclosures are less clear. If you receive a summons, you should talk with an attorney if possible. You may be able to talk with an attorney through the Legal Aid Foreclosure Help Line at (503) or Do I have to move out immediately? No, you will not have to move out immediately after receiving a notice of trustee s sale or summons. In a non-judicial foreclosure, you can be sent a 30 or 60 day notice to move out by the new owner after the trustee s foreclosure sale. The notice is discussed in question 3. The date of the trustee s foreclosure sale is listed in the written notice of trustee s sale.
2 In a judicial foreclosure, the new owner after the sheriff s foreclosure sale may be able to force you to leave the property within a few days after the sale. Generally, the sheriff s foreclosure sale is held several months after the court case is finished. 3. What does a foreclosure mean to me as a tenant? Many renters will be forced to move out of their home after the landlord is foreclosed upon and the home is sold. Oregon law contains some protections for tenants in foreclosed properties. For non-judicial foreclosures, the new owner is required to give you a 30 day notice after the date of the trustee s foreclosure sale if: 1) you are in a month to month tenancy; or 2) the new owner intends to live on the property. If you have a term lease (such as a 1 year lease), that ends after the sale, and the new owner does not intend to live on the property, you are entitled to a 60 day notice. The new owner can only give you a notice to move out after they have purchased the home at the trustee s foreclosure sale. You should do your best to move out by the date in the notice. If you are unable to move out before the notice expires, you should call the new owner to see if they will give you more time to move out. If you have a disability that makes it difficult for you to move out, you may request a reasonable accommodation for more time to move out. Once the notice period is up, the new owner can begin an eviction case to force you to move out. For judicial foreclosures, a tenant s rights are more complicated and you should speak with an attorney if possible. In most judicial foreclosures, the property is sold at a sheriff s sale after the court case is finished. If you are in a month to month lease, the new owner may be able to force you to leave soon after the sheriff s sale. If you have a written lease that extends past the date of the sheriff s sale, you may have a right to stay up to 180 days after the sale or until your lease ends, whichever is less. During the period after the sale, you would have to pay rent to the new owner. 4. I have a Section 8 voucher. How will a foreclosure affect me? In general, tenants with Section 8 vouchers are treated the same as other tenants in foreclosure. Many Section 8 leases are for a term of one year and your lease will give you the same rights as any tenant with a term lease as explained in question 3 above.
3 After the first year of living somewhere, Section 8 tenants often become month to month tenants. If you have a Section 8 voucher and have a month to month rental agreement, the new owner can give you a 30 day notice in a non-judicial foreclosure or may be able to force you to leave after the sheriff s sale in a judicial foreclosure as described in question 3 above. If you find out that your home is in foreclosure, contact your Housing Authority right away and take any steps necessary to preserve your voucher. If you have a different kind of subsidized housing, contact your Legal Aid office for more advice. 5. Can the locks be changed, preventing me from getting my belongings? Not without some prior notice to you. In non-judicial foreclosure, your locks cannot be changed until the new owner files and wins an eviction case against you. You will be served with a summons to appear in court when the owner begins an eviction case. If the locks have been changed and there has been no court order of eviction, contact an attorney right away. In judicial foreclosures, the new owner may be able to ask the sheriff to remove you from the property shortly after the sheriff s foreclosure sale. You should receive notice of the date of the sheriff s foreclosure sale by mail at least 28 days prior to the sale. Sheriff s foreclosure sale notices are also listed at 6. I ve been offered money to move. Should I take it? The bank or person foreclosing may offer you money so you agree to move out by a certain date. They probably want to avoid filing a court case and the cash may help you find another rental. Before accepting an offer, you should consider the cost of moving, and whether you can move by the proposed date. If necessary, reject the first offer and ask for more money or more time. The bank wants to avoid the expense of an eviction case, and may be willing to negotiate with you on the amount they are offering or on the move out date. If you do agree to an offer, get the agreement in writing and signed by an authorized bank representative. Make sure the agreement clearly states when you will receive the money. If you have questions about taking the bank s offer, contact an attorney.
4 7. Who do I pay rent to? Even though your landlord might not be paying their mortgage, you still have an obligation to pay rent until you move out. If you stop paying rent altogether, you could be evicted for failure to pay rent. If you do choose to stop paying rent, make sure you are keeping enough money aside to pay your rent at a later date if necessary. Your current landlord has the right to collect rent until the trustee s sale (non-judicial) or sheriff s sale (judicial) occurs. You may want to talk to the landlord about paying a lower monthly rent amount given the landlord s failure to provide you with a secure place to live. If the landlord agrees to accept a lower rent, make sure you get the agreement in writing and signed by your landlord. In some loan agreements (usually for larger apartment buildings), the owner of the property gives the lender the right to collect rent from the tenants if the landlord misses mortgage payments. In these cases, the lender can send a notice to the tenants or post a notice on the property telling the tenants to send rent directly to the lender. If you receive a notice like this, call the lender to confirm where you should send rent, then follow the instructions the lender provides. You should also call your landlord to let them know that you received a notice from the lender instructing you to pay rent directly to the lender. Make sure you get rent receipts when you pay rent to the lender. After the trustee s or sheriff s sale, your old landlord will no longer have a right to collect rent from you. In a non-judicial foreclosure you should receive a written notice after the trustee s foreclosure sale, giving you the new owner s name and contact information. The new owner becomes your new landlord if they: 1) accept rent from you; or 2) sign a new lease with you; or 3) do not give you a 30 or 60 day termination notice as discussed in question 3 within 30 days of the sale. If the new owner does not become your new landlord, they will not have to maintain the property. You will not owe rent but you must move out by the date on the termination notice. In a judicial foreclosure, the new owner may want to keep you as a tenant. If so, you should receive notice from them about where to pay the rent.
5 8. Can I apply my security deposit or last month s rent towards this month s rent now that I know my home is in foreclosure? Yes. You can apply any security deposit and/or prepaid rent towards your monthly rent payments once you become aware that your home is in foreclosure. This will generally be when you receive a summons or notice of trustee s sale. In order to apply your security deposit or prepaid rent deposit to your monthly rent, you must notify the landlord in writing that you are going to do this. At the end of this flyer is sample letter #2 that you can send to your landlord when you pay the amount of your rent minus your deposits. You should send a new written notice for each month you use deposits to pay rent. Once the home is foreclosed upon, you are unlikely to get your deposits back from the old owner. You should apply your deposits to your rent as soon as you know that your rental is facing foreclosure. If your landlord avoids the foreclosure, you may be required to re-pay your security deposit. The landlord must provide you with written evidence from the foreclosing entity that the unit is no longer in foreclosure and the landlord must allow you two months to re-pay the deposit. 9. Who is responsible for repairs if the rental property is in foreclosure? Even though the rental property is in foreclosure, the owner of the property is still responsible for its upkeep until ownership of the property has changed. You should continue to direct maintenance requests to your landlord. If you are paying rent to the lender (see question 7), then you should also direct your requests for repairs to the lender. If the landlord or lender refuses to make repairs, you may want to call your housing authority (if you receive section 8), your county or city building inspector if there is one (for Portland: the Portland Bureau of Buildings Neighborhood Inspection Program ((503) 823-CODE) or an attorney. 10. How can I know if the property I m renting is in foreclosure? In non-judicial foreclosures, you should be served with a written notice at least 120 days before the proposed foreclosure sale date. This notice must be either personally given to
6 you or posted on the property in an obvious place and mailed to the occupant at the property. The notice will explain your rights under state law. If you get a notice to move out from the new owner that gives you less than the amount of time discussed in question 3, call an attorney right away. In judicial foreclosures, you should receive a court summons. The summons should be personally handed to you or someone else living on the property. The summons may also be mailed and posted at the property. Records of foreclosures are available to the public. If you think your building may be in foreclosure, but have not received a notice or summons you can go to the county Assessor s office, and do a search of the public records for the property. You can also look online at sites like for foreclosure listings by zip code. For judicial foreclosures, there will be a record of the court case filed against your landlord at the county circuit court. 11. Once I move out, do I get my security deposit back? In most foreclosure cases, your original landlord is responsible for refunding your security deposit. It might be hard to get your deposit back from your original landlord so you should use your deposit for rent if possible (see question 8 and sample letter #2). If you applied your security deposit towards rent, then you are not entitled to have your deposit returned to you when you move out. Otherwise, the landlord must return it to you, or give you a list of what damages or expenses they were used for, within 31 days after moving out. 12. Do I have any claims against my old landlord? Maybe. If you signed a fixed term lease (like a 1 year lease) and the foreclosure forces you to move during the lease period, you may have claims against the landlord for violating the lease contract. You may also have claims against your landlord if the landlord knew they had missed payments and were heading toward foreclosure when they rented to you and they failed to tell you.
7 Talk to a lawyer to see if you have a claim against your landlord. You might be able to sue your landlord for moving costs, application fees, and any difference between the new rent (for a similar rental) and your old rent. Resources Legal Aid Foreclosure Help: (503) or Oregon Law Center & Legal Aid Services of Oregon: Center for NonProfit Legal Services (Jackson Co.): (541) Clatsop, Colombia, Tillamook, Washington, & Yamhill County Tenant Hotline (Mondays & Wednesdays 9-noon): (503) Multnomah County Housing Hotline (Tuesdays and Thursdays 1-3): (503) Community Alliance of Tenants: Renter s Rights Hotline: (503)
8 Sample Letter #1 Date: Dear (Name of Foreclosing Entity), I currently rent the property located at:. I was given notice that my home is in foreclosure. I have enclosed a copy of my rental agreement, lease agreement or evidence of my tenancy at the property you are foreclosing upon. ORS and require a new owner of residential rental property through foreclosure sale to give tenants written notices to vacate before moving to evict the tenant. A new owner can only terminate a tenancy by giving a tenant who has a month to month rental agreement at least 30 days notice to vacate. If the tenant has a fixed term lease, the new owner must give the tenant at least 60 days notice to vacate, unless the new owner intends to occupy the property, in which case the new owner must give at least 30 days notice. These notices cannot be issued until after the foreclosure sale and transfer of title. Please let me know how you would like me to pay my monthly rent payment once title transfers. Thank you. Sincerely, Tenant name
9 Sample Letter #2 Date: Dear (Landlord), I currently rent the property located at:. I was given notice that my home is in foreclosure. When I moved in, I paid a total of $ in security deposits and/or prepaid rent. My monthly rent is $. Oregon State Law allows me to apply my security deposit and prepaid rent to my monthly rent once I learn that my home is in foreclosure. (ORS ). With this letter, I am notifying you that I am applying $ of my security deposit and/or prepaid rent towards my monthly rent obligation this month. Enclosed is my rent check in the amount of $, which is the difference between my security deposit and prepaid paid and my monthly rent obligation, if any. Thank you. Sincerely, Tenant name
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