Foreclosed property

Ok, so I am going to start at the beginning of this story so bear with me.
The first week of August I moved into a rental unit. Paid SD and first months rent. After I was there for about two weeks I started getting wind that the place was being foreclosed on. The lady I rented from said oh no, they were fixing it, don’t pay attention to any of it and that there was a company coming around that were fraud and to not worry about them or deal with them, blah, blah, blah. Well Thursday I got a notice from what I am finding to be a very reputable company that the place was actually sold at auction to New York Bank Mellon on 6-3-16. I have 7 days to move or eviction proceedings will begin. I have been in contact with the paralegal in this matter and she says her client wants to sell after vacating the apartments. the city appraised the property at 369,400 and they bought it at auction for 297,000. I kinda want this property. I have plans that it would be great for but I’m looking for advice on what I should say or the best way to approach it.
Also advice on how to handle this lady who illegally rented me the apartment. I need my SD back to move and she refuses to give it to me. I have thought about having her arrested for theft as she didn’t have the legal right to rent the place.

Security Deposit


Depending on where you live and the amount of the security deposit, you could most likely sue in small claims court for the deposit back. To say the least, it gets a landlord’s attention.

There are fees involved and steps you must take first. I’m not qualified to address the rest.


So you have a few things going on here.
If the lady is the owner or is acting as the authorized rep for the owner, she had the right to rent the unit.

I assume you have a lease agreement. If so, most states grant the tenant the right to live out the balance of the lease. If you don’t, you will have 90 days to move out. You don’t say what state you’re in, so the period may differ but the tenant rights are likely the same.

It doesn’t sound like you will be getting your deposit back so why not just apply it to one of your months. It looks as though the property went back to the bank and it may take sometime before it is sold to another party.

As you get closer to the end of your lease, look for another property to rent and move out when your lease is up.

Alexander Burnett

[QUOTE=Alexander (FL);894454]

I assume you have a lease agreement. If so, most states grant the tenant the right to live out the balance of the lease. If you don’t, you will have 90 days to move out. You don’t say what state you’re in, so the period may differ but the tenant rights are likely the same.[/QUOTE]

I’ve owned a number of rentals through the years. Generally, I found mortgages I have contains a subordination clauses, in the case of default, places the right of the mortgage holder over the tenants.

Then, the standard lease I used contains a clause that makes the lease subordinate to the mortgage as well, as explained below:

“…Accordingly, as illustrated by the two examples set out above, the rights of the tenant greatly depend upon whether it has “priority” over the lender’s mortgage. This tenant priority may be lost (a) in accordance with the terms of the lease or (b) pursuant to the provisions of a subordination agreement. In many leases, the tenant has agreed to a provision stating that “the tenant hereby subordinates its lease to any present or future mortgage made by the landlord registered against title to the property”. Such an “automatic subordination” clause, without corresponding “non-disturbance” protection, could severely undermine the rights of the tenant in a landlord loan default situation. Whether or not an automatic subordination clause is contained in the lease, landlords are very often met with a requirement in their mortgage loan financing commitment to obtain subordination agreements from all tenants of the property as a condition to the first advance of the mortgage loan. Many lenders wish to have such a prior position so that they may elect to “pick and choose” which of the leases the lender will agree to honour if a loan default occurs. Lenders may have a variety of legitimate reasons for wanting to enjoy such flexibility, including freeing the property from non-arms’ length owner-related leases or “problem” tenants that are driving down the value of the property, or simply to remove tenants entitled to pay less than the current market rents in the hope of replacing them with current market deals…”

So it is more than likely the mortgage and the lease both subordinates the lease to the mortgage, at least that the way it goes with my renters. So if I’m foreclosed on, my tenants can be legally evicted by the mortgage holder.

Landlord-Tenant laws are governed by state statute, regardless of the lender’s requirements or what is contained in your lease.

As mentioned in my post, the tenant retains rights of possession when a foreclosure is involved. Rights and timeframe will depend with each state.

Alexander Burnett

Already Sold at Auction

Agreed, local housing laws would apply. I’m in NY and the banks would even have to follow certain procedures in notifying tenants of the foreclosure, just like when I sell a tenant occupied rental.

The problem here is OP mentioned the property was sold at a bank auction on June 3, 2016, to NY Bank Mellon, and she moved in as of Aug 2016. Unless the previous owner signed the lease prior to Jun 3, 2016, this owner cannot legally rent out this house, if this is who she is dealing with, because he or she no longer owns it.

Even here, the housing law in NY only applies to tenants already occupying rental units before the bank foreclosure and sale, not afterwards, so whether or not the previous owner did something illegal is besides the point. In other words, if she lived there May 2016, the law would protect her, and she can demand to stay the balance of the lease, but starting Aug 2016, NO.

Under these circumstances, looks like OP would be out of luck under the protection of landlord tenant laws of most states. This is when subordination clauses in the mortgage kicks in.

OP did not mention who this person she’s dealing with is, certainly doesn’t sound like a rep from Bank Mellon. In LI, NY there are lots of so called zombie homes, bank owned unoccupied properties. Squatters would either move in, squat there, or move in and list the property in Craigslist for rent, collect a few security deposit payments from unsuspecting victims, and then skip town.

In these cases, looks like the potential renters got scammed, and local housing laws cant help. You may even have more than one party claiming the rental.

Now, in buying bank REO’s I know the banks do not change the deeds to their names immediately after a bank auction. Often, they bid and then buy it back themselves. So even if you check the public records, its still in the names of the previous owners. The deeds are only recorded when they find a final buyer such as myself.

What are the remedies? Housing court and small claims, complaints to local and state agencies take time. I myself find I have better luck seeking help with local newspapers and TV stations.