Our Rented Home is Being Sold Before Our Lease is Up. What Are Our Rights?

Note: The DearEsq free 'ask a lawyer' site is offered as a free informational service to the public and is not intended as legal advice. Laws vary from state-to-state, and in addition every situation is unique, and relevant facts may not be known. The answer to the question posed below may not apply to in your state or to your situation. For legal advice in your state and your situation you should consult with an attorney in your state who is familiar with the rules and laws in your state.

‘Do we have any right to break a lease when the property goes up for Trustee’s Sale? We rented a house and signed a 12 month lease for 4/1/10 through 3/31/11. After 3 months, we got a notice of trustee’s sale that the property would be sold 9/20/10. The real estate agent, on behalf of the owner (who is a relative of hers), states that he’s trying to do a mortgage adjustment and that there has been an extension on the sale. When we signed the lease, we asked if the owner was paying his mortgage and she said yes. After some research on the internet, we found that the house was up for trustee’s sale in Feb. 2010 but had been canceled. My question is: It states in our lease that the landlord shall not allow the property to become subject to trustee’s sale. Isn’t this a breach of the lease contract as the property is now subject to trustee’s sale? She is saying that we have to stay because the owner is trying to get an extension. Do we have any rights with vacating the premises? Can we give 30 days notice? We were notified in June about the sale and we have still honored our end of the lease agreement and continued to pay rent on time every month but we don’t want to wait to the last minute and find out the house sells. Please help.’

Question: First, most landlord/tenant law is highly dependent on what state you’re in. The correct rules and procedures vary pretty widely from state to state, so I can’t tell you exactly what the legal conclusion is in your situation. You are correct that it appears your landlord may have breached the lease (because of the “no trustee’s sale” clause), but whether that breach is enough to terminate the lease is hard to say.

If you want to leave, regardless of your legal right I would first explore a negotiated termination with your landlord. Failing that, you can always look for an inexpensive consultation with a local attorney who can tell you what the laws are in your area.

However, if you’re only leaving because you are concerned that the new owner will kick you out, you should know that the rules have recently changed. By Federal law (the “Protecting Tenants at Foreclosure Act of 2009”), a bona fide tenant cannot be kicked out immediately after foreclosure. If you have a lease for a specified period of time, you get to stay until it ends. If you are month-to-month, your tenancy cannot be terminated without 90 days’ notice.

There are some exceptions to these general rules, and of course you have to keep paying rent and all your other obligations under the lease. However, this law has made things much easier on tenants in foreclosure,
who in many states used to be subject to immediate eviction.