How Long Can Tenants Stay in a Foreclosed Property in Pennsylvania?

Owning and managing rental properties in Pennsylvania is a massive responsibility, as you provide housing to tenants who need it. If you are at risk of mortgage foreclosure on a rental property, what happens to your tenants, and how can you protect them?

Tenants who live in recently foreclosed-upon properties can typically stay there until their leases are over in Pennsylvania. If the new owner has standing to evict residents after a sheriff’s sale, they must give residents a 90-day notice to vacate. Property owners can prevent foreclosures from affecting their tenants and themselves by letting our lawyers negotiate new mortgage agreements with lenders that could potentially cure outstanding payments. If negotiations are unsuccessful, we can help property owners fight their cases in court or help them file for bankruptcy, as doing so can prevent mortgage foreclosures and sheriff’s sales.

Call Young, Marr, Mallis & Associates for a free case assessment from our Pennsylvania mortgage foreclosure defense lawyers at (215) 701-6519.

What Happens to Tenants Living in Foreclosed Properties in Pennsylvania?

Tenants cannot control whether their landlords meet monthly mortgage payments and thus have no control over whether a property gets foreclosed. If this happens to tenants in Pennsylvania, they may be able to stay in their rental units until their current leasing agreement ends.

Suppose you live in an apartment building or single-family home that has been foreclosed upon and auctioned off at a sheriff’s sale in Pennsylvania. In that case, you may be protected under the Protecting Tenants at Foreclosure Act (PTFA). Under the PTFA, tenants can stay in foreclosed properties for the remainder of their lease period, provided the new owner does not intend to utilize the property as their primary residence, in which case they must give tenants a 90-day notice to vacate. Month-to-month tenants also typically have 90 days to vacate foreclosed properties if the new owner does not wish to renew a lease.

These protections only apply to bona fide tenants, which, under the PTFA, exclude any tenants who are a mortgagor’s spouse, children, parents, or tenants who pay substantially less than fair market value for rent.

If the new owner does not have reason to evict tenants following a sheriff’s sale, tenants can likely stay in their units or homes until their current leasing agreement periods are over, provided they signed their current leasing agreements with the previous owner before foreclosure began.

Whether or not tenants can renew their leasing agreements with the new owner after the lease ends is a different matter. If tenants meet the general qualifications property managers look for, they can often renew leases after rental properties change hands in Pennsylvania. So, more often than not, foreclosure has a greater impact on property owners than tenants, as their living situations might not change much.

Preventing Mortgage Foreclosures from Affecting Tenants in Pennsylvania

Property owners and managers in Pennsylvania provide housing to their tenants. Should their properties go into foreclosure, those same tenants risk losing their housing, and property owners risk losing an important income stream. Our attorneys can help property owners continue in their real estate endeavors and let them continue offering safe housing to tenants.

Cure the Mortgage or Negotiate a New Plan

Property owners are at risk of foreclosure after missing just a few months of payments. If your missed payment amounts are relatively low, you may be able to avoid foreclosure by curing the mortgage altogether. This will require you to pay all outstanding amounts fully. If you cannot cure your mortgage entirely, our lawyers can start negotiating with your lender to rework the existing mortgage agreement. When property owners successfully renegotiate agreements, they may be able to avoid foreclosure and a possible sheriff’s sale in Pennsylvania. Our attorneys can propose a new payment schedule and payment amounts that suit both the lender and the property owner.

File for Bankruptcy

If you need some relief to settle outstanding payments on a rental property mortgage in Pennsylvania, filing for bankruptcy can provide that. During a bankruptcy case, tenants can stay in their homes without fear of eviction or foreclosure, provided the debtor sees the case through. Even if foreclosure or a sheriff’s sale is imminent, filing Chapter 7 or 13 bankruptcy will stop those processes from continuing.

Based on your income and the size of your debt, our Pennsylvania mortgage foreclosure defense lawyers will determine which bankruptcy chapter suits your case and start preparing your petition. If your primary creditor is your mortgage lender, we can devise a repayment plan that lets you settle your debts within three to five years. Because mortgage debts are not dischargeable, you must repay them during bankruptcy. If you file Chapter 7, the property you filed bankruptcy to keep could get liquidated, especially since Pennsylvania does not have a homestead exemption or exemptions for rental properties. If you file Chapter 7 and do not properly protect your assets, you could lose the property to repay the lender, and your tenants could be without a place to live once their lease terms are up or sooner if the new owner has reason to evict.

Fight Foreclosure in Court

Property owners can defend foreclosure cases in court in Pennsylvania. Lenders that fail to follow the necessary steps in mortgage foreclosure proceedings might see their claims dismissed. Banks that violate state and federal lending laws might not be able to foreclose on properties, even if owners miss several payments. If there is evidence of predatory lending practices or other egregious behavior, you may be able to win your foreclosure case, letting you keep your rental property in Pennsylvania. To prepare your defense against foreclosure, our lawyers will need all documents related to your current mortgage agreement, records of past payments, and copies of any correspondence with your lender.

Call Our Lawyers in Pennsylvania Today

Call Young, Marr, Mallis & Associates’ Philadelphia mortgage foreclosure defense lawyers for a free case review at (215) 701-6519.