Legal Questions Answered By Griffin & Murphy, LLP

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Griffin & Murphy, LLP, is a boutique law firm in Washington, D.C. concentrating its practice in real estate law (including development, finance, leasing, zoning and condominium conversions), as well as estate planning and probate, civil litigation, and business law. The attorneys of Griffin & Murphy, LLP are licensed to practice law in the District of Columbia, Maryland and Virginia. Griffin and Murphy, LLP was founded in 1981.

Please send any legal questions relating to real estate, rentals, buildings, renovations or other legal items to princeofpetworth (at) gmail (dot) com, each week one question will be featured. You can find previous questions featured here.


I rent a condo in Montgomery County. I have been there about 6 months of a 1-year lease (and have always paid my rent on time). However, the landlord has been having financial problems and now is going into foreclosure. I received papers recently that said the property would be put up for public auction in a few days. What should I, as a tenant, do in this situation to protect myself? As far as eviction goes, I read that there was a recent law that says they have to honor the term of the lease in most cases, so I feel better knowing that. However, I am still concerned about any “scare tactics” or problems that I can expect to encounter along the way. Is it necessary to talk to a lawyer – and what kind of lawyer would best be able to help? I’ve never been in any kind of legal situation like this before and don’t know where to start. And is that going to cost a lot of money? Once the property goes up for auction, who is responsible for repairs on the condo (especially if there was an emergency)? And while this isn’t a huge deal, am I going to have to expect potential buyers coming into my home?  I’m not even sure I want to stay in the unit if there are all these legal and communication issues. Is it possible for me to get out of the lease early? Would I be eligible to be reimbursed for moving and other related expenses in that case? And finally, is there anything else that I should know about? Thanks for your help!


Duties Owed to the Landlord’s Lender (if any)

As a tenant, you most likely have no obligation to your landlord’s lender unless the lender bids on the condo at the foreclosure sale and the sale is finally ratified by the court.  The one exception would be if your landlord’s mortgage contained an assignment of leases and rents provision providing that in the event the landlord defaults on the mortgage, the lender may require that any tenant living in the mortgaged property pay rent directly to the lender.  If the mortgage contained such a provision and the lender decided to exercise its rights thereunder, you should have received a notice from the lender informing you of where to send your monthly rent check.  Make sure you open all mail that is addressed to the occupant or resident of the rental property, particularly if the envelope indicates the letter is from a law firm or bank.  Also, the lender is required by Maryland law to provide you with notice of the impending foreclosure sale and contact information for the person authorized to sell the property. Continues after the jump.

Eviction and the Protecting Tenants at Foreclosure Act

To answer your question about eviction, a new law enacted last year (the Protecting Tenants at Foreclosure Act) provides some relief for tenants like you who are leasing residential property that is foreclosed upon by the landlord’s lender.  The new law provides that a purchaser (including the lender) of a foreclosed upon residential property assumes title to the property subject to the obligation to provide an existing tenant with notice to vacate the property at least 90 days before the effective date of such notice.  If you have a lease that would expire more than 90 days after the foreclosure sale is ratified by the court, the purchaser of the property must honor the lease until the end of the lease term.  However, the purchaser or its successor in interest may terminate the lease earlier if the purchaser intends to occupy the property as a primary residence, but the termination will not be effective until the purchaser has received title to the property and subsequently provided the tenant 90 days notice to vacate the property.  Please note that tenants are protected by the new law only if (i) the purchaser/lender became the owner on or after May 20, 2009; (ii) the tenant was a tenant in the foreclosed property at the time the new owner took title; (iii) the tenant is not the child, parent or spouse of the former owner/landlord; and (iv) the tenant’s rent is equal to or is not substantially below fair market rent, or the tenant pays less because she receives rental assistance such as Section 8.

Cash for Keys

Although you will have at least 90 days to vacate the rental property after title has been transferred to the new owner, if you want to move or if the new owner wants you to move, the new owner may, but is not required to, offer to pay your moving expenses and any other costs or amounts you and the new owner agree on in exchange for your agreement to leave the premises earlier than would otherwise be legally required.

Rent and Maintenance

Prior to ratification of the foreclosure sale and the transfer of title to the new owner, the tenant will typically pay rent to the current landlord and will look to the current landlord to make any necessary repairs to the premises.  As a practical matter, the lender may want to (and under the mortgage usually has the ability to) correct any problems with the property because it is in the lender’s best interest to preserve the value of its collateral.  After the ratification of the sale, the tenant should receive instructions from the purchaser regarding the payment of rent.  Lenders usually hire property management companies that specialize in real estate owned (REO) property to maintain the property for them.  The new landlord’s maintenance obligations will still be governed by the terms of the lease.

Whether or Not You Should Hire an Attorney

If you feel uncomfortable with all of the legal notices you are receiving, or if you feel like you are not receiving adequate notice regarding the foreclosure process, it might be worthwhile to contact a lawyer that specializes in real estate law for some guidance. A lawyer could also help you in negotiating a “cash for keys” exchange to terminate the tenancy before the federally-mandated time periods. But if you don’t have a lawyer or can’t afford one, I don’t think you will have a problem if you go it alone.

Security Deposit

If you were required to provide your landlord with a security deposit when you signed your lease, the new landlord must recognize the security deposit and refund it to you at the expiration of your tenancy, provided the new landlord has no right to retain all or a portion of the security deposit under the terms of your lease. If the new landlord does not comply with this requirement, the tenant may file a claim for the security deposit in small claims court.

Marketing the Rental Property

While you lawfully inhabit the property, you do not need to allow the new landlord to show the place to prospective buyers unless your lease provides otherwise.  A residential lease normally provides the landlord with reasonable access to the property for the purpose of marketing it for sale.

This response was prepared by Mark G. Griffin and Patrick D. Blake of Griffin & Murphy, LLP. The material contained in this response has been prepared for informational purposes only and should not be relied upon as legal advice or as a substitute for a consultation with a qualified attorney. Nothing in this response should be considered as either creating an attorney-client relationship between the reader and Griffin & Murphy, LLP or as rendering of legal advice for any specific matter.

19 Comment

  • you’ll be living rent free for at least 6 months. Unless the place sells really quickly. good for you

  • If I were you I would stop paying rent. Technically, your condo has no owner. What can the previous owner do? Evict you? Obviously he stopped paying his mortgage and has been collecting your rent and keeping it. And there is no new owner yet. It may be a while until the lender forecloses on the condo, finds a new buyer, etc. The process could take a few months. What’s the worst thing that may happen at the end. You get evicted? By that time you’ll have lived rent free for a few months and saved yourself a few thousand dollars.

  • i am a little ashamed that that was my first thought to. you could stop paying rent to anyone and be alright for a good while

  • Non-payment of rent is very bad advise. Until the property is foreclosed upon the landlord is still the owner, and you have a contractual obligation to pay him, no matter what he is doing with the money on the back end. So he can bring an eviction case, and sue for the rent owed as well. The landlord’s rights probably also transfer along with the obligations, so the new owner could probably evict you as well (if a proceeding was brought), either way you will be on the hook to someone for the money, and if you think a bank isn’t going to report you to a credit agency – think again. Probably could live “rent-free” for a couple of months, if by free you mean having a judgment hanging over your head, along with not being able to rent and/or buy at a reasonable rate for a while…

  • Yeah, not paying any rent at all seems risky… maybe an escrow account would be more appropriate, so that you are fulfilling the terms of your lease, but the old landlord isn’t just running away with your money?

  • Annon,

    You’re painting a too bleak a picture. The landlord is not really the landlord. He’s property is being foreclosed. He doesn’t have money to pay his mortgage, do you think he has money to spend on lawyers to evict someone?
    The banks have so many foreclosed properties in their hands that they don’t have the time to evict tenants. They can hardly keep up with getting rid of these foreclosed houses.

    I know a guy who moved into a foreclosed house, lived there rent-free for more than a year and get this: he rented out the rooms in the house to tenants of his own.
    He ended up buying the property from the bank.

  • I went through this in California. The laws are different here, but still similar.

    After it is in foreclosure do not pay rent to anyone until there is a new owner. The bank can not charge you rent while they own it. Otherwise there would be no motivation for them to get it off their books.

    I lived rent free for 6 months, then I moved here so I let a friend move into my place. 2 yrs later he is still living there rent-free as it is still bank owned. In CA they have to pay you roughly $3500 per adult and $2000 for every child to make you move.

    I am not sure of the exact laws in MD but I do know that DC is very similar to CA.

  • Wow! It really is no wonder this country is in the condition it is in. No one should live “rent free.” That is an absurd concept. Druskini, what you and your friend have going amounts to nothing less than fraud. You’re effectively squatters, no?

    I am sure it must suck to the OP, but frankly in this area 90 is about 89 days more than it takes to find someplace to live. Assuming nothing happens immediately, by the time all is said and done 90 days might even put you at or over your one year lease.

    I am not a lawyer, so I am not sure if you have the right to live in your apartment indefinitely without paying rent, bequeathing it to your children, grandchildren and great grandchildren, until you or one of your progeny decide to take a buyout in exchange for leaving a place you haven’t paid for and have no right living in, but if you do take that route make sure to destroy and I mean completely destroy the place on your way out.

    Please note my sarcasm, but I can’t see much of a difference between folks like Druskini and many of the folks getting foreclosed on. We’ll never get out of the mess we’re in as long as people believe they are entitled to something for nothing.

    • I agree that nobody should live rent free and when I first learned that the place was going to foreclosure I just assumed that I would have to leave and I was fine with that.
      Then came this manager or liason between the bank and the property who explained all the laws to us. I told him before my bud moved in there and he was fine with it.
      Squatters, yeah you could call it that, but I did everything by the book.
      That’s the law in CA whether it is right or wrong.

    • I don’t think it sounds like druskini feels entitled — just lucky. Thems the breaks. Life’s not fair. Some people get a free pass every once and a while, and others get squashed.

  • Some of the advice so far is shameful. No wonder so many people sign contracts they have no intention of honoring, default on debts, fail to pay credit cards… After reading through the above posts, I’m starting to lose faith that people generally try to do good.

  • For those that think not paying rent is shameful re-read the paragraph above titled:
    Rent and Maintenance

    Basically it says you are to pay rent before foreclosure and after the property is sold. In the meantime there is nobody to pay rent to. The bank legally can not take rent and they won’t even ask for it.

    If you feel morally wrong for staying somewhere for free by all means move out.

  • So it appears the landlord has been collecting the tenant’s rent for 6 months and mostly did not likely pay any of the mortgage during that term and probably before. who is the shameful party in this matter?

  • Yeah, I think I agree with RD. Not saying 2 wrongs make a right, but I would feel like a schmuck forking over rent money to a landlord who wasn’t paying his mortgage. What do they need the money for?

  • nice photo

  • Actually, reading in the OP’s post again that the property will be put up for auction in a couple days, I think it’s pretty cut-and-dried that at this point, the landlord no longer owns the property so the tenant should definitely not be paying rent to the landlord. Not sure if the bank can and would request the rent money until the property is sold — so I wouldn’t go blowing your rent money on hookers and blow or whatever in case you need to pay it.

  • Dear POP – does this firm take clients for possible civil litigation against contractors? They have a fancy website and it doesn’t say much about real estate related civil litigation.

  • OP here. Thank you to the lawyers for your helpful advice. This certainly helps to know moving forward, and gives me some peace of mind.

    Update: our landlord was about to work things out with his mortgage at the very last minute (about 6 hours before it was supposed to go up for auction!). But of course there’s no guarantee that he won’t get in trouble in the future, so I will remember all of this information in case that happens.

    As for the people who don’t want me to pay rent: Are you out of your minds? Thanks for suggesting that I put myself in a potentially serious legal situation, but I will pass on that. I’m incredibly disturbed that that was the first response from people. Aside from wanting to avoid any kind of legal trouble, I feel that simply taking advantage of my landlord by not paying him rent does not in any way help his problem. What kind of people would do that to someone?

    We did talk to another lawyer in the meantime who told us that legal help wouldn’t really be necessary at this point. But he did advise us, in case the property was sold, to get a protective order and put the money in a rent escrow. Not exactly sure that I got the terminology right on all of that, but basically his point was that we should “put aside” rent payments so that we wouldn’t get evicted. We were also advised to go to the auction to find out right away who was the new owner, since the papers could take weeks to go through. Luckily we didn’t have to after all. I hope that is helpful to anyone else in this situation.

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