My Landlord Is in Foreclosure: Can I Get My Deposit Back?

While the home is in foreclosure, the landlord is still the owner and your lease is legally binding. The bank can't evict you during the foreclosure. Both parties are required to comply with the terms of the lease. After the home is foreclosed, you are no longer required to stay in the home. If you choose to stay, you typically may do so for at least 90 days after a foreclosure sale. In some cases, you may stay in the home to finish out the duration of the lease.

Although paying rent to a landlord who isn't paying his mortgage seems unfair, you are legally required to pay as long as you signed a lease. In most states, if you are renting in a residential building with one to four units, the lender is legally permitted to collect your rent once the owner defaults. When the bank intends to begin collecting your rent, you will receive a notice. To protect yourself, make copies of your rent checks before mailing them to the landlord.

When renting a home in foreclosure, the landlord is still required to maintain the property. In some cases, the landlord may be unwilling to make necessary repairs to the home. Notify the lender and landlord of any maintenance requests in writing. Most states allow you to make the repairs yourself and deduct the cost from the monthly rent. Some states will allow you to withhold rent until the landlord makes the repairs, but require tenants to set the money aside in a separate account. Laws vary by state.

The landlord from whom you leased the property is responsible for refunding your security deposit. Most state laws require landlords to keep security deposits in a separate account, safe from creditors. When the home is foreclosed, the landlord's interest in the home also ends. At that point, he is required to refund your deposit. However, collecting the funds from the former landlord is often a challenge. You may need to file a lawsuit against the homeowner. Even with a court order, collecting funds from someone with financial problems is challenging. Certain states, such as California and Massachusetts, hold successors jointly liable for the security deposit. If the landlord doesn't pay, the new owner would need to issue you the refund.