Renters in Foreclosure Must Receive Warning
Posted on November 12, 2008
Filed Under Foreclosures | Leave a Comment
As the number of homes going into foreclosure increases by the day, renters have been under as much stress as homeowners. Many renters have continued to pay their monthly rent only to find out at the last minute that their house has been foreclosed on and they must find somewhere to go on very short notice. Many do not know where their monthly rent has gone, if the home’s mortgage was not being paid with it. They have no recourse but to search frantically for somewhere else to move before they are thrown out.
In Chicago, a City Council Committee has taken on this issue by initiating a crackdown that would require renters in their city to receive a notice if the home they live in is going into foreclosure.
Previous to the current housing crisis which has taken an unprecedented number of buildings into foreclosure, Chicago required as little as five days notice for renters in foreclosure situations. Thanks to the state’s General Assembly, renters will now receive at least 90 days notice ahead of the date they will be required to leave a foreclosed home or building. This new crackdown will require landlords to inform their tenants within seven days after they have received a notice of foreclosure.
The City Council’s Building Committee has issued the ordinance, which will give renters the option to terminate the lease and move out immediately if they do not receive the warning within seven days of the landlord being issued the notice of foreclosure. Also under this ordinance, the landlord’s will be required to pay a $200 fine for failing to alert their tenants that the property they live in will be foreclosed upon.
With the wide outbreak of foreclosures in Chicago, many renters have been shocked when the Sherriff showed up on their porch with an eviction notice. For many renters, that was their first warning that they need to find somewhere else to live. Such complaints from renters have become more vocal all across the country.
The new notice will be delivered to renters or any third parties who regularly pay the rent on behalf of a tenant. It will include the name of the court the foreclosure is filed in along with the case name and number. The language of the notice will make it clear that renters must continue to pay their rent and that they are not required to move out at that point.
It is critical that the notice include a statement that rent must continue to be paid because property owners are worried people will pack up and move as soon as they get the notice, which will create another problem with abandoned buildings all over the city. Often, foreclosure proceedings drag on for a year or more and in many cases the owner is able to work out an agreement to get back on track and save the property. While renters do need to be warned, they are not to pack up and move with a foreclosure notice.
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