The National Law Center on Homelessness & Poverty and the National Low Income Housing Coalition have published a joint report reviewing the rights (or lack thereof) of tenants in foreclosure in the 50 states and the District of Columbia.
The study concludes that in the majority of states, a renter’s tenancy would be automatically terminated following a foreclosure; however, the circumstances vary greatly. For example, 17 states require some form of notice of the foreclosure prior to an eviction. In 12 of these states, the new owners can terminate tenancy fairly rapidly after a foreclosure, but only if the tenant has been joined in the foreclosure proceedings. Fourteen states and the District of Columbia permit foreclosure to occur only through a judicial process. The rest of the states permit both judicial and non-judicial foreclosure proceedings. Non-judicial foreclosure generally allows an expedited disposal of the property. In New Jersey and the District of Columbia does a tenancy survive the foreclosure, because local laws specify what serves as a just cause for eviction, and foreclosure is not among them.
In general, the study finds that there are three ways in which the interplay between foreclosure and eviction occurs within states. First, there are states that have an integrated process that notifies tenants of any foreclosure proceedings and may require them to be joined as parties in the foreclosure in order to be evicted. The second group of states has completely independent foreclosure and eviction processes. In these states the status of tenancy is often unclear after foreclosure and left to a separate eviction process. Finally, there are hybrid models in which state law offers some specific guidance on tenancy after foreclosure, but a significant lack of clarity often remains regarding rights of possession.
The report recommends that in order to stem renter eviction and the subsequent rise in homelessness, the federal government needs to take immediate action to protect tenants in cases of foreclosure. Recommendations include requiring fair notice to tenants, preserving existing tenancies, and providing renters with legal assistance.
The report includes an appendix with state-by-state policy descriptions.
The report, Without Just Cause: A 50-State Review of the (Lack of) Rights of Tenants in Foreclosure, can be found here: http://www.nlchp.org/content/pubs/WithoutJustCause1.pdf.