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Renters have rights when the property is foreclosed

Q. We enjoy reading your column in the Daily Herald and are hoping you can shed some light on our dilemma. We are looking to buy something in a year or so. We are now renting and the property owner advised us that he is going into foreclosure.

Ideally, we don't want to move twice in a little over a year. We've heard the foreclosure process takes one to two years, but we fear being forced to vacate with little notice.

Do renters have any rights in these circumstances, and if so, what are they?

A. In attempting to calculate how much time you may be able to retain possession of this property, you first must determine where the case involving your property is in the foreclosure process. Has a case been filed? If not, you likely have lots of time before anyone demands you move If so, was the case filed weeks ago or a month or two ago? If so, it will likely be months if not over a year before the foreclosure process is concluded and the new owner (often the mortgage company) takes possession.

The next factor to consider is your rights under state law. In May 2009, President Obama signed into (federal) law the Protecting Tenants at Foreclosure Act. Under this law, tenants were permitted to stay at least until the end of their written lease, while month-to-month tenants, who often don't have written leases, were entitled to 90 days' notice before having to vacate the property. However, the Protecting Tenants in Foreclosure Act of 2009 expired on Dec. 31, 2014.

On Aug. 21, 2013, then Illinois Governor Pat Quinn signed into law 735 ILCS 5/9-207.5, a new statute protecting Illinois renters in foreclosed properties. The state law is very similar to the expired federal law. The law requires anyone who acquires residential property through a foreclosure to honor their tenant's existing leases or provide sufficient notice so the renters can find new housing.

Specifically, the law states that, in the case of a foreclosure, the landlord (new owner) may terminate a bona fide lease only:

• At the end of the term of the lease, by no less than 90 days' written notice. If the buyer at the foreclosure sale intends to occupy the property as a primary residence, the lease can be terminated with 90 days' notice.

• In the case of a lease that is for a month-to-month or week-to-week rental, by no less than 90 days' written notice.

So, if you have a written lease that expires six months from the date the new owner takes title to the property, you can remain at the property for at least six months, unless the new owner intends to occupy the property. Then you have at least 90 days. If you have a written lease that expires three months or less from when the new owner takes title, you may retain possession for at least three months. If there is no written lease, you have at least three months.

What is a bona fide lease?

A bona fide lease means a residential lease in which all of the following are true:

• The mortgagor (borrower) or the child, spouse, or parent of the mortgagor is not the tenant, though there are exceptions to this provision.

• The lease was the result of an arms-length transaction (generally this means a transaction between strangers).

• The rent in the lease is not substantially less than fair market rent for the property or the rent is reduced or subsidized pursuant to a federal, state, or local subsidy.

• Either the lease was entered into or renewed (1) on or before the date of the filing of the lis pendens or (2) after the date of the filing of the lis pendens and before the date of the judicial sale of the residential real estate in foreclosure, and the term of the lease is for one year or less.

A lis pendens is a document filed with the county recorder giving notice to all that a lawsuit is pending involving this property.

Contact a real estate attorney familiar with these proceedings for further details.

• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to tdr100@hotmail.com or call (847) 359-8983.

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