FORECLOSURES AND THE TENANT IN 2017
Federal law required the foreclosing bank or purchaser at auction to honor the existing lease upon acquiring title, but that law expired as of 12/31/14 and is no longer in effect. A new state law (FS 83.561) took effect in July of 2015, but does not provide that much in the way of protecting the tenancy interest on a property being foreclosed. Once the foreclosure is formally finalized, the foreclosing bank (or purchaser at auction) can obtain a writ of possession after giving the tenant 30 days' written notice. It won’t be surprising to see a resurgence of Florida case law allowing a tenant to break a lease if the property goes into foreclosure, a development that essentially stopped when the federal law went into effect a few years ago. However, we don’t believe a tenant has a right to withhold rent simply by virtue of the property being in foreclosure. You can evict such a tenant for nonpayment of rent when the property is under foreclosure, but our office reviews these potential evictions on a case by case basis, and we charge a higher attorney’s fee to be prepaid if we elect to handle the case. If the foreclosure action is deep in progress, it usually makes no sense to pursue an eviction.
Once title changes with the tenants still in place, you would technically be required to turn over the deposit funds to the new owner with an accurate accounting under FS 83.49(7), and the new owner would be required to hold the funds in escrow. Before title does change, the present owner could authorize you to return the deposit money to the tenants as part of some early move-out arrangement. Once the foreclosure sale has occurred, the owner has no more authority over the property or decisions to return the deposit to the tenant, and your management role would also be over, unless the new owner hires you.
Oftentimes, the foreclosing bank wants nothing to do with the security deposit money upon obtaining title. If you obtain a clear written disclaimer from the bank, then you can return the deposit money to the tenant.
- The Curable Noncompliance Examined PART 1
- THE CURABLE NONCOMPLIANCE EXAMINED PART 2
- THE WRIT OF POSSESSION – WHAT IT IS
- THE WRIT OF POSSESSION AND THE FULL UNIT
- WORK ORDER COMPANY POLICY AND THE LAW