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May 27, 2009 -- New law protects renters after landlord foreclosure

Clark has been on the air since 1987 and never can he recall a time when Washington D.C. has been so pivotal in the life of American capitalism.

Here's yet another example of this continuing trend. There's a new federal housing law on the books that provides protection for tenants who are current on their rent while their landlords are facing foreclosure.

The law permits you as a paying tenant to stay for the remainder of your lease, plus an additional 90 days. The foreclosing bank essentially becomes your landlord and tells you where to mail your check. This is a sea change. Where we previously had scattered state laws, now we have one national code.

And if you're renting without a lease, you'll get a 90-day notice of eviction.

Clark is steering clear of addressing this as yet another instance of federal intervention in the free market. Yet he maintains that the system we had in place was not adequate. Paying renters previously could find themselves on the street in as little as 5 days after their landlord was served with a foreclosure notice.

It's possible that some smaller lenders may not be aware of the new law as they're in the foreclosure process. If that's happening to you, you can file a written appeal and have your day in court to present the judge with information about the new law.

Meanwhile, do you suspect you might be paying too much for rent in your area? Now there's an online tool that lets you know if you're right. It's called RentoMeter.com. If it turns out you are overpaying, the website will even suggest alternate nearby locations that have lower rents! Of course, it won't be accurate 100% of the time.

Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.

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What others are saying

  • tenants rights
    Even though the President has enacted this law to protect tenants, the law still is not working for us. I live a house that was recently forclosed on. The investor that purchased the home told me the law does pertain to him and I had better move out in 60 days or he will evict me and put it on my credit. I have tried to contact professionals who deal with landlord/tenant related issues to find that most of them say they don't know anything about the law. If they don't know, I think it is safe to say the judges in the court system don't know either. We need more exposure on this law. It just isn't working.
  • Changing State Law
    Under current Georgia law, if there is no written lease, a landlord can evict a tenant with 60 days notice and a tenant can leave with 30 days notice. This Federal Law changes that to 90 days now. Essentially, you get MORE rights as a tenant if your landlord happens to have been foreclosed on than you do as an ordinary tenant without a written lease and the new landlord now gets less. This part of the law is unnecessary and overreaching. If there is no written lease, then the new landlord (who foreclosed) should have at least the same rights as the landlord who they foreclosed on. With no written lease, expect the rent to go up if the new landlord is hamstringed like this.
  • renters issue
    As a property manager, I think this new law is helping low income families. Right now, I have this situation in my hands and I'm going to use this law against the "new owner" -a bank- because they went to my renter's apartment and intimidate them, with evictions, etc, making them sign a piece of paper, etc.
    Those that think this is socialism, they they don't know what realy "socialism" is. The true issue here, is that the economic crisis, and many families are suffering, are homeless because the abusive eviction process.
  • Cost of rent
    On the contrary, upon foreclosing a property which they've been receiving $0 payments for the bank will now receive an extra bonus in the form of the tenants rent for X months rather than an empty house and no cash flow. The tenant isn't paying back a loan so it's effectively free money they wouldn't otherwise have received in the deal. It's not additional cost for banks, it's additional revenue. They only lose money if property goes down in the meantime which, the past 3 years or so excluded, very rarely happens.

    It's a win-win situation really unless you're the landlord losing the property.
  • In the long run, nothing is free
    I agree with Clark, that something had to be done; the situation that foreclosed landlords that were not notifying tenants was not tenable.

    But this is way too far. Maybe the remainder of the lease, but 90 days after that? Expect the cost of renting to go up as in the future lenders will have to price this new cost into future financing for rental properties.
  • Socialist Sam
    I hope you are trying to be funny. Socialism is so mean spirited. A great marketing plan has made it seem to be so empathetic but it actually has an opposite effect. Those in power decide who gets what, fair? Fair is working for what you have. The government is being charitable with MY money. They take the credit but didn't work for it. Socialism sucks!
  • Government Mandated Renting Laws
    Yeah South Carolina and Texas...
    Where you at now? Put that in your "States Rights" pipes and smoke it. Gooooooooo Obamaaaaaaaa!
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