Homeowners are not the only ones being hit with foreclosures. When a rented property goes into foreclosure, tenants may not find out about it until they receive an eviction notice from the bank, saying that the apartment or house will go up for sale. Or if the bank holds onto the house or apartment, it will probably not be very good at providing the maintenance that tenants need. Keep reading to learn more about renter's rights in this real estate climate.

This foreclosure crisis affects all different types of renters. Smaller dwellings, condos, and single-family homes going into foreclosure affect a great number of renters. But foreclosures have also hit cities, suburbs, lower-income districts, and higher-income neighborhoods. The type of property owner who defaults, on the other hand, often fits into one type of category. These owners are often investors who tried to generate income from rental properties. With the housing economy souring as it did, these owners may not have been able to pull off a sale if they wanted to, or to even collect enough rent to meet monthly expenses. Foreclosure came to these types of rentals in huge waves. In Minneapolis alone, for instance, sixty-five percent of the foreclosures in 2006 were foreclosures on rented properties. The rental properties in the Minneapolis suburbs were hit almost as hard.

Who takes over these properties? Usually the bank is the new owner. Often, they may want to sell off the property, or if they maintain control of the property, they might hire a servicing company to manage the property. Even so, these companies generally manage the financial aspects of the rentals alone, claiming only a spotty record when it comes to property upkeep. Tenants may often be unaware of the takeover. They may continue to make their monthly payments, only later to find that there is never repair work done, and perhaps even utility bills go unpaid.

Beforehand, most tenants found their leases terminated in the event of a foreclosure. Then President Obama signed the "Protecting Tenants at Foreclosure Act of 2009". Generally speaking under this law, tenants can remain on the property through to the end of the lease; if a tenant rents month-to-month, they are given 90 days before eviction, which is more than any state law provides for. This also means that tenants who live where there is "just cause" eviction protection, foreclosure is not a just cause for a terminated lease.

With these legal protections, a tenant usually cannot go after their previous landlord if the property is foreclosed upon. However, if a tenant with a lease is evicted so that the new owner of the property can move in, that tenant may be able to sue their previous landlord. That is because when a landlord signs a lease, they must by law provide the rental property to the tenant for the agreed upon lease term. This in conveyed in the legal phrase "covenant of quiet enjoyment". If a landlord is foreclosed upon, this triggers a lost lease, a breach of this "covenant of quiet enjoyment". In some cases then, a tenant can sue in small claims court for the damages resulting from this breach. These damages could include the costs incurred from moving, from looking for new housing, for submitting housing applications, and in some cases, renters can be compensated for the difference in rent they are now paying.

To learn more about your legal protections and rights to compensation, contact an experienced real estate lawyer today. On our directory, you can find the legal expert who can guide you through your state's laws and complex legal processes of small claims court.