May 14, 2013
Following foreclosure, can new owner raise tenant's rent?
Dear Consumer Ed:
The house we rent was foreclosed on and then sold by the bank. There are still 6 months left on the lease and the new owners want to raise the rent and get a new security deposit (even though our original deposit was not returned). Is this legal? If not, whom should I contact to resolve the issue?
Consumer Ed says:
The Protecting Tenants at Foreclosure Act (PTFA), a federal law, specifically addresses your issue. The PTFA was signed into law on May 20, 2009 and protects tenants when the property they rent is sold at a foreclosure sale. The Dodd-Frank Wall Street Reform and Consumer Protection Act extended the PTFA protections until December 31, 2014. Even though the PTFA is a federal law, it still applies to state court eviction proceedings.
If you originally entered into your lease before the notice of foreclosure, then the new owners bought the property subject to your rights as a tenant. In other words, your lease did not end when the property was sold at foreclosure, and the new owners must recognize your original lease. If the new owners will not use the house as their primary residence, then they must allow you to stay in the house and pay rent until the end of your original lease. However, the new owners only have to give you 90 days’ notice to vacate the property if they are in fact going to occupy the house (you’d still have 90 days to vacate, even if there were less than 90 days remaining on your lease).
While you remain in the house (either for the remainder of your lease or for the 90 days), the new owners cannot raise your rent or require a new security deposit. You will still have to pay rent, but you will pay the same rent required under your original lease to the new owners of the house. If you don’t pay rent, the new owners can go to court to have you evicted; they can also have you evicted if you stay in the house after your lease expires (or after the 90 days’ notice period).
If the new owners continue to insist that you pay additional rent and/or an additional security deposit, you should contact an attorney to address your specific case. The State Bar of Georgia (404-527-8700 or 800-334-6865) can give you information to help you locate an attorney, or you could contact your local Georgia Legal Services Program office. You may also pursue an issue with your landlord on your own through the local magistrate court. In the event you cannot afford an attorney, you may want to contact an organization that deals with landlord-tenant disputes, like Atlanta Legal Aid.