For many renters, it’s among the worst-case scenarios: Your landlord notifies you that the property you’re renting has been put up for sale.
Of course, landlords have the right to sell their property. But just because your house or apartment is going on the market doesn’t necessarily mean you’re out on the street right away. As with other landlord-tenant issues, it’s a process.
So, what happens when your landlord sells your rental, and what does that mean for your lease? Here is what you need to know:
— What does your lease say?
The first thing you should do is read your lease, says Mike Carroll, a senior attorney with Community Legal Services of Philadelphia’s housing unit. There, you may find a “lease termination due to sale” clause — though it’s somewhat rare.
“In a majority of cases, the lease is silent about what happens in a sale,” Carroll says. But if it is there, it will explain what happens if the property is sold, including how much notice you’ll get before you have to move out. Typically, it will be between 30 and 90 days.
Local and state law can vary markedly on the rights tenants have when their domicile is sold. Some cities, such as Seattle and Portland, Ore., require that landlords compensate tenants with money to help them relocate in the event of a sale. And in Baltimore, landlords have to give tenants a chance to buy the place first, which is known as the “right of first refusal.” Even if your city doesn’t have such laws, Carroll notes, some leases may contain those provisions, so make sure you check your agreement first.
Whatever the lease says, though, it’s important to understand that you can’t break your lease just because your rental is for sale, Carroll says. So, unless your lease says otherwise, you should keep paying your rent up until you move out in order to avoid an eviction. Your landlord has to abide by the terms of the lease, including giving you the required notice for showings, appraisals, or repairs.
— What if the lease doesn’t cover sales?
If your lease is silent about what happens if your rental is being sold, what happens next is primarily determined by state or local law. In a pretty typical example, the Pennsylvania Landlord and Tenant Act of 1951 says that the new owners of a rented property “shall be liable to the same duties … as the person from whom the title was acquired.”
So what does that mean? Well, in short, your lease still stands — even if the property is under new ownership. You just have a new landlord who can collect rent and is obligated to make repairs.
“The general rule is that if you bought a place with a tenant in it, you bought the lease,” Carroll says. “It doesn’t end unless in your lease you made a provision for it to end. Everything applies to the new owner as it would to the old owner.”
But that doesn’t mean you shouldn’t expect any complications. The new owners, Carroll notes, could pursue an eviction if they have the legal grounds to do so — if you haven’t paid rent, or you are breaking some other term in the lease. Or they could choose to not renew the lease at the end of its current term. Either way, though, they will need to give you the proper notice, and follow the other terms set out in your lease.
— Is it different if it’s a foreclosure?
In a word, yes. But it depends on the reason for the foreclosure.
If the foreclosure is because your landlord didn’t pay the mortgage, you’re protected by the federal Protecting Tenants at Foreclosure Act. The PTFA, according to the Federal Reserve, is designed to “ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing.”
How much time will you be allowed to stay? At least 90 days after a sheriff sale. But many tenants will be able to stay until the end of their lease term, Carroll says. The only exception is if the new owners plan to occupy the house themselves, in which case you will get 90 days notice before they can begin to evict you.
If the foreclosure is because your landlord didn’t pay their taxes, it can be a little muddier. The law may vary based on where you live. In Pennsylvania, the Municipal Claims and Tax Liens Act plays a role in those situations, Carroll says, because it gives the owner of a property up to nine months after a tax sale to pay the taxes they owe and get their property back. During those nine months, he says, the new owner may be unable to throw you out.
“Whether it’s a small-time landlord or a big developer, they have nine months during which they don’t have the title to the place, and arguably they cannot evict the person who is in there,” he says. “I believe it would apply to tenants.”
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