Each U.S. state has varying foreclosure laws, as well as differing laws concerning rental properties and the rights of tenants in foreclosure. In Maryland, laws protect tenant rights through the process, but do nothing to help former landlords following a foreclosure.
In 2008, Maryland restructured its foreclosure laws to provide greater protection to property owners. According to the Maryland State Bar Association, state law prohibits a lender from placing a property in foreclosure for at least 90 days following the first late payment. From there, lenders must wait an additional 45 days before placing the property for sale in a foreclosure auction.
When a rental property falls into foreclosure, the process ultimately results in a relocation of property tenants unless the new owner chooses to continue renting the property. Following the sale, a Maryland court will ratify the sale, which makes it official. Though a new owner owns the property, he may not evict an existing tenant immediately. Instead, the new owner may send tenants a notice to vacate the property within 90 days.
Though a property tenant has no financial interest in a rented property, she may have the right to file a motion to delay or dismiss the foreclosure of the property she occupies. Only renters who were given no notice of foreclosure within the 10 to 30 day period prior to the sale may file a motion to stay, delay or dismiss the foreclosure.
The Protecting Tenants at Foreclosure Act protects tenants from eviction by a new landlord. If the new property owner intends to lease the property rather than occupy it, he may not evict a current tenant until the tenant's existing lease contract expires. Furthermore, he cannot raise the rent or change the terms of the existing lease contract.
Right of Redemption
Some landlords look to the right of redemption laws to recover and continue leasing properties that have fallen into foreclosure. According to the Cornell University Law School, right of redemption laws allow homeowners to buy back their homes even after a lien-holder sells the property at auction. To redeem the home, the lien holder must receive payment in full for the home in addition to unpaid penalty fees and interest from the delinquency. Maryland, however, has no such law, and homeowners do not have the right to recover a property post-sale. Instead, state law provides a right to cure law that requires lenders to accept payment for a property in full up to one business day prior to a foreclosure sale.
- Public Justice Center: Tenants and Foreclosure Procedure in Maryland
- Maryland State Bar Association: Foreclosure Proceedings in Maryland
- Maryland Attorney Consumer Protection Division: Landlord Foreclosures
- Cornell University Law School: Right of Redemption
- ForeclosureLaw.org: Maryland Foreclosure Law Summary
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