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Foreclosures also affect tenants

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Published on: Wednesday, December 23, 2009

By Maryland Attorney General Douglas F. Gansler

Most Marylanders are well aware that the current foreclosure crisis affects homeowners. However, foreclosures also affect tenants. When landlords default on their mortgages and the rental properties enter foreclosure, renters face the prospect of being forced out. Tenants need to be aware of their rights if they discover that their landlord is in foreclosure.

New federal legislation gives most tenants the right to remain in the property at least 90 days after the foreclosure sale is ratified by the court. Tenants should receive notices alerting them when foreclosure proceedings have been instituted against the property they are occupying.

Under Maryland law, tenants should receive three separate written notices concerning the foreclosure: the first should be sent simultaneously with the filing of an order to docket or complaint to foreclose; the second should be received no earlier than 30 days, but no later than 10 days before the sale date to inform the tenant of the date, time and place of the sale; the third notice is when possession is awarded to the purchaser but prior to the tenant’s eviction. The written notices must be sent first class and include pertinent information about the foreclosure proceedings and information regarding whom the tenant may contact for further information.

Under the Protecting Tenants at Foreclosure Act, a new federal law, the new owner must allow a bona fide residential tenant to remain in the property until the lease expires or, if the tenant has a month-to-month lease, for 90 days. The 90 days is measured from the point of ratification, which is when the court approves the new owner’s title to the property. A new owner who intends to reside in the property must honor the terms and conditions of the tenant’s lease, but may give 90 days’ notice of eviction following ratification. If the purchaser does not intend to occupy the home as a primary residence, in most instances, tenants will be able to remain in the home under the same terms and conditions until the lease expires. After that, there is a possibility that the new owner may be open to creating a new lease with the tenant. Remember, the new owner may make changes to the lease terms upon renewal. In addition, tenants should continue to make rental payments or risk eviction at an earlier time for non-payment. Once the foreclosure sale is complete, payments should be made to the new owner.   

Even if the landlord is in foreclosure or facing financial difficulties, the landlord is still obligated to maintain the property. If a landlord fails to repair serious or dangerous defects in a rental unit, the tenant has the right to pay rent into an escrow account established at the local district court. However, the law is very specific about the conditions and procedure to begin putting rent in escrow. Call the Consumer Protection Division at 410-576-6500 for the publication, “Landlords and Tenants: Tips on Avoiding Disputes,” for more information (also available online at

If consumers have any questions or complaints about landlord foreclosures, they should contact the Consumer Protection Division’s hotline at 410-528-8662 or online at Additional information including helpful links to outside organizations can be found at

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