If your landlord is facing foreclosure, stay put (© moodboard/Alamy)

© moodboard/Alamy

Outside of a doctor's office, few notices are more terrifying than an eviction.

Since the housing bust, more than 8 million properties in this country have gone into foreclosure. An estimated 40% of the people living in those homes were, and are, tenants, according to RealtyTrac, a foreclosure marketplace, and the nonprofit National Low Income Housing Coalition.

Being uprooted is frightening for anyone. But renters endure added stressors: They often are the last to know that a foreclosure is in the works, having paid their rent faithfully each month; and they typically are the most misinformed about their own rights, through no fault of their own.

While a 2009 federal law requires that tenants be allowed to stay for the duration of their lease or, without a lease, for at least 90 days, no federal agency oversees the law's implementation, says Linda Couch, senior vice president for policy and research with the housing coalition.

"From the number of calls that we get, it certainly appears that there is a gross unevenness of compliance," Couch says. "Tenants still don't get told about their right to stay."

So what does this look like on the ground? Tenants see a foreclosure notice, then get a knock on the door. Standing before them is not someone helping them, or even informing them of their rights under various laws, but agents representing the building's new owner -- the bank or the real-estate group -- who have their own interest at heart: to get the renters out.

"Very few tenants are accurately informed of what their rights are after foreclosure," says Dean Preston, executive director of Tenants Together, a statewide tenant advocacy group in California. "Particularly with the real-estate agents, there is clearly a financial incentive that they have to vacate the properties as quickly as possible."

(Tenants: Have you had trouble finding the information or help that you need with rental issues? Let us know, and we'll write more on this in the January Rental Advice column. Send an e-mail to msnrealestate@microsoft.com.)

5 things renters need to know about eviction from foreclosed properties

1. The lease and tenancy take precedence.
The Protecting Tenants at Foreclosure Act of 2009 is a federal law that allows renters to remain in a foreclosed building for the duration of their lease. Tenants who have a month-to-month lease or who are under an oral agreement -- so-called tenants at will -- can stay at least 90 days from the date they receive a written eviction notice. Because this is a federal law, it applies to renters in every state, city and town.

The only exception is if the new owner plans to live in the unit himself before the lease or the 90-day period expires.

2. If someone official tells you otherwise, take a name.
While strict ethical codes govern what real-estate agents must disclose to buyers and sellers, the same principles do not seem to apply to what agents do, and do not, tell tenants, Preston says.

"There is a widespread violation of tenant rights by agents of banks after foreclosure, and some of the worst violators are the real-estate agents," he says.

Agents will request to show the unit multiple times a day, or dozens of times in a week. Some have posted notices falsely proclaiming that an eviction proceeding has begun, even though none has. Many aggressively push cash-for-keys programs that are not a good deal for the tenant.

Tenants, after all, are not their clients, and agents are essentially rewarded for clearing a property quickly. If you think you have been provided misleading or erroneous information, report the incident to the state's department of housing or the local real-estate association.

3. Get it in writing.
"A lot of these tactics that are used to deceive tenants are done verbally," Preston says. That's intentional. Agents don't want to get in trouble.

"Tenants can make a lot of these verbal harassments go away just by demanding everything in writing."

So if someone is at your door, simply tell that agent: I don't wish to discuss my tenancy any further. Please put it in writing.

4. Cash for keys is only a request.
The tactic currently in favor is to offer tenants -- many of whom aren't aware they can even stay through their lease or 90 days -- cash to leave quickly. This may be a good option for some tenants, but often it is not.

Typically, the tenant receives the cash only after handing over the keys, far too late to use as a deposit on another apartment. Often the amount is less than the security deposit, which the tenant might lose. Worst of all, many tenants grab the cash unaware that they could have stayed in the apartment longer, giving them more time to find a new home.

Preston's advice: Always seek help from a local tenant advocate in the case of an eviction.

If you do accept cash for keys, ask for a good portion of the money upfront.

5. State and local laws may offer additional protection.
A small but growing number of localities are passing just-cause eviction laws that exclude foreclosure. There are state laws in Massachusetts and New Jersey.

What this means is that landlords can never evict tenants without cause, and foreclosure is not considered a cause.

Do I still have to pay the rent?
One of our readers asked a common question: If the landlord is delinquent, where do I send the rent? Should I even pay the rent?

It's a good question. We've all heard stories about landlords who, headed toward foreclosure, have decided to pocket the rent money. It's also true that many such properties have already been neglected. Being told to pay anyway is a tough pill to swallow. Besides, if you have to move and the landlord is bust, isn't there a good chance you've already lost your security deposit?

So, here's the key question: Do you want to stay in the unit? If the answer is yes, then you need to do two things, says Janet Portman, a housing lawyer with Nolo, a legal-information service.

1. Pay the rent. On time and in full. You don't want to give new owners any ammunition against you.

2. Confirm the identity of the current owner, and pay that owner. Document everything in writing.

In buildings with one to four rental units, lenders are permitted by law -- except in Michigan -- to collect the rent directly from tenants once the owner has defaulted. In that case, the tenant will be notified of the change in writing. To guard against scams, confirm the address of the lender before mailing the rent check and make copies for your own records.

If you don't receive such a letter, there are other ways to find out who owns the mortgage. The information may be on your lease, and will definitely be in county records, available either online or in person.

Contact the lender, then follow up with a "letter of understanding," Portman says. In it, reiterate the conversation, including the statement, "It is my understanding that you want me to send the rent money to X address. If this is incorrect, notify me immediately." Make a copy and, if possible, send it certified mail so you'll have a return receipt.

"If they tell you, 'Go ahead and keep paying the landlord,' then you write them" another letter of understanding, Portman says. "Whatever they tell you, you send a letter confirming that, because it protects you.

"Remember, if you've got a lease, you can stay, but not if you haven't paid the rent," she adds.

Situations can get confusing, but renters who keep a record that they have paid someone, even the delinquent owner, should be protected from eviction.

As always, seek advice from a local tenants group. Tenants Together, which serves all of California, has counseled more than 5,000 tenants in foreclosure and set up a special foreclosure hotline.

Questions? Comments? Do you have a question about renting or a suggestion for a future topic in this column? Submit either in the comments section below or on Facebook, or email msnrealestate@microsoft.com. Brief questions have the best chance of being selected.