Landlord-Tenant Disputes During a New Jersey Foreclosure

Many tenants may be surprised to learn that their landlord’s mortgage lender may attempt to evict from their homes through no fault of their own.  Even if you pay rent on time each month and are a model tenant, if the landlord is unable to make his or her mortgage payments, the mortgage lender is entitled to foreclose upon the home despite the fact that the borrower has chosen to treat the property as a rental.

Landlord-tenant disputes during a New Jersey foreclosure can be complicated, but, as a tenant, you do have rights.

An experienced attorney who understands the New Jersey foreclosure system can explain the impact of foreclosure upon your lease, as well as your rights during the foreclosure process.

Impact of Foreclosure Upon a Tenant’s Lease

If a landlord is unable to make his or her mortgage payments, the mortgage lender can begin the foreclosure process despite the fact that a tenant has a valid ongoing lease to rent the property.

Landlord-tenant disputes during a New Jersey foreclosure are governed by both federal and state laws, and New Jersey law does provide protections for tenants who may be evicted due to foreclosure.  For example:

  • Under the Helping Families Save Their Homes Act of 2009, the landlord must provide the tenant with at least 90 days notice that he or she must leave the property after the property has been sold to a purchaser who wishes to use the property as a primary residence.
  • Under the New Jersey Foreclosure Fairness Act, any person who purchases a foreclosed property that was used as a rental must provide written notice that the property has changed hands, in English and Spanish, within ten business days of the sale, if the tenants are not required to move as a result. The purpose of this notice is essentially to apprise the tenant of their new landlord.

The foreclosing mortgage lender may also be required to give certain notices if it is requesting that the tenants to move before the foreclosure sale.  The bank is entitled to make a bona fide monetary offer to entice tenants to move before the foreclosure occurs.  If the tenant accepts the offer, the acceptance must be in writing, and the tenant has five days to review the offer.  

Action Steps for Tenants Facing Eviction Because of Foreclosure

Even though a tenant who is being evicted because of a landlord-tenant dispute during a New Jersey foreclosure cannot stop the bank from selling the home and proceeding with the eviction, the tenant does have rights.  Importantly, the lease agreement the tenant signed with the landlord is a contract under state law.  Technically, the foreclosure constituted a breach of the landlord’s promise to provide housing in exchange for rent payments.  Tenants may wish to take the following steps:

  • Sue the landlord. A tenant who must vacate due to a foreclosure can sue the original landlord for moving costs, increased rent in a new rental, application fees, and other expenses associated with finding a new rental property.
  • Contact the rent control board. If the rental is subject to rent control limits, the tenant should contact the rent control board if the landlord attempts to unconscionably raise the rent in order to induce the tenant to move.  If the apartment is not rent controlled, housing court may be an option.

Contacting a New Jersey Landlord-Tenant Attorney

A skilled landlord-tenant attorney can be a powerful advocate if you are facing eviction due to a landlord-tenant dispute during a New Jersey foreclosure.  Contact an attorney as soon as you learn that the property you are renting will potentially be foreclosed upon.

It is important to remember that your landlord is not entitled to lock you out or attempt a self-eviction, and the bank cannot pressure you to accept a monetary inducement to move.  An attorney can explain your options if you are facing one of these scenarios.