Foreclosure of Residential Property

Topics on this page:

Effect of Foreclosure Sale on Purchaser and Tenant
Notice Required to Terminate Tenancy
Notice of Foreclosure Action
Notice of Impending Foreclosure Sale
Prohibition of Nonjudicial Eviction
Notice of Eviction
Summary of Required Notices
Collection of Rent

Maryland law provides protections for tenants when the property is foreclosed. This article describes the rights of purchasers and tenants.

Effect of Foreclosure Sale on Purchaser and Tenant

The purchaser at a mortgage foreclosure sale has the same rights and remedies against the tenants of the mortgagor (the tenants' original landlord) as the mortgagor had, and the tenants have the same rights and remedies against the purchaser as they had against their original landlord on the day the mortgage was recorded. So, where the lease predates the mortgage, a foreclosure sale will not end the lease. Where the tenancy began after the mortgage was recorded, the tenants still have certain rights regarding notification of the foreclosure action, the foreclosure sale and any notice of eviction. Read the Law: Md. Code, Real Property § 7-105.8

Notice Required to Terminate Tenancy

Bone fide tenants of residential property are entitled to at least 90 days notice before termination of the tenancy. A lease or tenancy is considered "bona fide" only if the tenant is not the child, spouse or parent of the original landlord, the lease transaction was made at arm’s length (i.e., the lessor and lessee act independently), and the rent is not substantially less than fair market rent for the property (unless the unit's rent is reduced or subsidized due to a federal, State, or local subsidy). Read the Law: Md. Code, Real Property § 7-105.8

If the foreclosed property has not been purchased by an owner who will use the property as his primary residence (an “owner-occupier”), the new owner takes possession of the property subject to any leases on the property and must allow the tenant to continue renting the property until the later of:

the end of the lease term, or
90 days from the date that notice of termination of the tenancy is given to the tenant.

If an owner-occupier purchases the property, he can terminate the tenancy before the end of the lease term, but must provide the tenant with a 90 day notice of termination. For tenants who are no longer under a lease and renting at-will or month-to-month, the new property owner, whether an owner-occupier or not, must give the tenant 90 days notice before the tenant has to leave.

NOTE: If the foreclosure sale was advertised as being subject to 1 or more tenancies, those leases are unaffected by the sale, except the purchaser becomes the landlord, as of the date of the sale.

The required 90 day notice must:

Be in writing;
Be sent by first-class and certified mail, return receipt requested;
State the date on which the notice is being given;
State the date on which the termination of the tenancy is effective; and
State whether the basis for termination of the tenancy is the expiration of the lease term, sale of the property to a purchaser who will occupy the property as a primary residence, or termination of a month-to-month or at-will tenancy.

The requirements for termination of any federal- or State-subsidized tenancy, or of any State or local law that provides longer time periods or additional protection for tenants, supersedes these notice provisions. Read the Law: Md. Code, Real Property § 7-105.8

Notice of Foreclosure Action

In addition to any other notice required to be given by Maryland law, the person authorized to make a sale of residential property in a foreclosure action must send a separate written notice according to the following requirements:

notice sent by first-class mail
in at least 12 point type
addressed to "all occupants"
at the address of the residential property
the address side of the envelope must display the following: "IMPORTANT NOTICE TO ALL OCCUPANTS: FORECLOSURE INFORMATION ENCLOSED. OPEN IMMEDIATELY." - in bold, capitalized letters of at least 12 point type
be sent at least 45 days before the foreclosure sale could occur

The notice must substantially be in the following form:

IMPORTANT NOTICE

A foreclosure action has been filed against the property located at (insert address) in the circuit court for (insert name of county). This notice is being sent to you as a person who lives in this property.

A foreclosure sale of the property may occur at any time after 45 days from the date of this notice.

Most renters have the right to continue renting the property after it is sold at foreclosure. The foreclosure sale purchaser becomes the new landlord.

Most renters with a lease for a specific period of time have the right to continue renting the property until the end of the lease term. Most month-to-month renters have the right to continue renting the property for 90 days after receiving a written notice to vacate from the new owner.

You should get legal advice to determine if you have these rights.

Below you will find the name, address, and telephone number of the person authorized to sell the property. You may contact this person to notify him or her that you are a tenant at the property and to find out more about the sale. For further information, you may review the file in the office of the clerk of the circuit court. You also may contact the Maryland Department of Housing and Community Development, at (insert telephone number), or consult the Department's website, (insert website address), for assistance.

Person authorized to sell the property:

(Name)
(Address)
(Telephone)
(Date of this notice)

Read the Law: Md Code, Real Property § 7-105.11

Notice of Impending Foreclosure Sale

In addition to the notice described above, the person authorized to make a sale of residential property in a foreclosure action must send a separate written notice according to the following requirements:

notice sent by first-class mail
in at least 12 point type
addressed to "all occupants"
at the address of the residential property
the address side of the envelope must display the following: "IMPORTANT NOTICE TO ALL OCCUPANTS: FORECLOSURE INFORMATION ENCLOSED. OPEN IMMEDIATELY." - in bold, capitalized letters of at least 12 point type
be sent not earlier than 30 days and not later than 10 days before the date of sale

The notice must substantially be in the following form:

NOTICE OF IMPENDING FORECLOSURE SALE

A foreclosure sale of the property is scheduled to occur as follows:

Date: ________________________
Time: ________________________
Place: ________________________

Most renters have the right to continue renting the property after it is sold at foreclosure. The foreclosure sale purchaser becomes the new landlord.

You should get legal advice to determine if you have these rights.

Below you will find the name, address, and telephone number of the person authorized to sell the property. You may contact this person to notify him or her that you are a tenant at the property and to find out more about the sale. For further information, you may review the file in the office of the clerk of the circuit court. You also may contact the Maryland Department of Housing and Community Development, at (insert telephone number), or consult the Department's, website, (insert website address), for assistance.

Person authorized to sell the property:
(Name)
(Address)
(Telephone)
(Date of this notice)

Read the Law: Md Code, Real Property § 7-105.11

Prohibition of Nonjudicial Eviction

The person who purchases residential property in a foreclosure sale or claims a right of possession may not take possession or threaten to take possession of the property from a protected resident by locking the resident out of the residential property, cut off essential services, such as gas, heat, water, electricity, etc., or take any other action that deprives the protected resident of actual possession. Read the Law: Md. Code, Real Property § 7-113

Notice of Eviction

A residential eviction after foreclosure sale follows this timeline:

purchaser buys the property at foreclosure sale
purchaser notifies tenant of termination of tenancy, giving the tenant 90 days to move
if tenant does not leave, purchaser files a Motion for Judgment of Possession
court enters a Judgment of Possession to purchaser

After the entry of the judgment of possession, the purchaser must send a notice according to the following requirements:

written notice
sent by first-class mail
written in least 12 point type
addressed to "all occupants"
at the address of the residential property
the address side of the envelope must display the following: "IMPORTANT NOTICE TO ALL OCCUPANTS: EVICTION INFORMATION ENCLOSED. OPEN IMMEDIATELY." - in bold, capitalized letters of at least 12 point type)

The notice must substantially be in the following form:

IMPORTANT EVICTION NOTICE

The circuit court for (insert name of county) has entered a judgment awarding possession of the property located at (insert address). YOU COULD BE EVICTED FROM THE PROPERTY ON ANY DAY AFTER (insert first date after which eviction could legally occur under State and local law).

Below you will find the name, address, and telephone number of the person who purchased the property or the purchaser's agent. You may contact this person to find out more about the court order. For further information, you may review the file in the office of the clerk of the circuit court. You may want to consult an attorney to determine your rights. You also may contact the Maryland Department of Housing and Community Development, at (insert telephone number), or consult the Department's website, (insert website address), for assistance.

Purchaser of the property or purchaser's agent:
(Name)
(Address)
(Telephone)
(Date of this notice)

Read the Law: Md Code, Real Property § 7-105.11

The person giving a notice required by this section must file in the foreclosure proceeding after each notice is sent an affidavit of compliance with the provisions of this section.

In the event of postponement of the sale, which may be done at the discretion of the person authorized to make the sale, no new or additional notice has to be given pursuant to this section.

Summary of Required Notices

First Notice
- Foreclosure filing in court (sale may occur after 45 days)
Second Notice
- 10-30 day notice to occupant of foreclosure sale's scheduled date and time
Third Notice
- Transfer of title, tenant has 90 days to vacate
- Note: a non-bona fide tenant cannot take advantage of the 90 day notice requirement and purchaser can file the motion for judgment of possession immediately
Fourth Notice
- Tenant must be served with a copy of the motion for judgment of possession
- Md. Rule 14-102
Fifth Notice
- Court enters a judgment of possession

Collection of Rent

A foreclosure sale purchaser may not exercise any right to collect rent payments from a bona fide tenant in possession of a residential property unless the purchaser:

Conducts a reasonable inquiry into:
1. The occupancy status of the residential property; and
2. Whether any individual in possession of the residential property is a bona fide tenant; and
Serves on each bona fide tenant, by first class mail with a certificate of mailing, a notice that:
1. Contains the name, address, and phone number of the purchaser or the agent of the purchaser who is responsible for managing and maintaining the residential property; and
2. States that rent payments must be directed to the purchaser or the agent.

A foreclosure sale purchaser waives any claim to rent payments from a bona fide tenant in possession of a residential property for any period of time before the purchaser satisfies the requirements of this section, except that the waiver does not apply to rent for use of the residential property for the 15 days immediately prior to the date the purchaser satisfied the requirements of this section. Read the Law: Md. Code, Real Property § 7-105.12

Maryland Tenants in Foreclosure Timeline22.69 KB

Public Justice Center Brochure: What You Need to Know About Foreclosure96.13 KB

Source

Baltimore Neighborhoods (BNI), and the Public Justice Center (PJC). Edited by Russell R. Reno, Jr., Esq., Public Justice Center