Rights of Tacoma Tenants Following Foreclosure

Rights of Tacoma Tenants Following ForeclosureWhile the real estate market has turned around to some extent in Washington, the number of foreclosures in Tacoma continues to outpace other cities throughout the state. Approximately one in every 685 homes was subject to a foreclosure notice in November 2015, according to data from Realtytrac.com. Since many foreclosed residential properties are occupied by tenants, our Tacoma eviction lawyers often receive questions about the rights of tenants following a foreclosure sale. The eviction process (also called “unlawful detainer”) differs when a property has been sold following foreclosure as opposed to eviction for non-payment of rent. Because both property owners and tenants need to understand these differences, this blog discusses the rights of tenants after a foreclosure.

Who Gets Rent Payments: A mistake often made by tenants involves paying rent to the wrong party. Once a foreclosure sale has been completed and title has transferred, the prior landlord no longer owns the property. If a tenant continues to pay rent to the prior owner, these payments will not satisfy the obligation to make rental payments. If a tenant has reason to suspect a foreclosure is pending, some basic due diligence will ensure rent is paid to the proper party. The new owner should be able to produce a “Trustees Deed” to confirm ownership has officially transferred to the purchaser. This deed can be verified by checking records with the county recorder’s office to confirm authenticity. While some tenants are tempted to stop paying rent after learning that a rental unit is subject to foreclosure proceedings, the landlord might proceed with an eviction if rent is discontinued. Tenants should be aware of scams that involve attempts by non-owners to collect rent despite the lack of any right to receive such payments.

Minimum Notice Following Foreclosure: While a tenant is only entitled to three-day notice prior to initiating an eviction for non-payment of rent, a tenant is entitled to 60 days between the date of written notice to vacate and the date scheduled to move out. If a notice for a shorter period is served, the tenant should contact the new owner and indicate an intention to exercise his or her right to remain in the property for 60 days under state law. Tenants, buyers, and mortgage lenders also should be aware that a foreclosing party (e.g., trustee or bank) must provide a renter with 120 day notice prior to a foreclosure sale. This notice (referred to as “Notice of Trustee Sale”) of the foreclosure sale does not terminate the tenancy. If a tenant receives this notice, the tenant needs to be aware of the potential sale even if the current landlord assures the tenant that the issue has been resolved.

Status of Lease: Notwithstanding the notice requirements discussed above, a property purchaser who does not intend to move in takes ownership of the property subject to the terms and conditions of the existing lease until expiration of the lease term. Under federal law, a valid unexpired lease must be honored, but the owner may serve 60 day notice if he or she plans to move into the foreclosed property.

Return of Deposit: Most tenants are required to provide their landlord with a deposit (also last month’s rent) as part of the terms of taking possession. Under Washington landlord-tenant law, this money must be refunded to the tenant or transferred to the new owner of the rental property. Tenants might want to send a letter to the landlord with whom they signed their existing lease with a reminder of this obligation to refund or transfer the deposit/last month’s rent.

If you have questions about landlord-tenant law or need representation in an unlawful detainer action, we are here to help. To schedule a free consultation a Tacoma eviction lawyer, call the Dickson Frohlich today at (253) 572-1000 or send us an email at [email protected]