North Carolina has responded to the expiration of the PTFA by enacting State legislation to protect certain tenants facing otherwise immediate eviction through no fault of their own. That being said the new law is not all inclusive and does have limitations.
If the purchaser of the foreclosed home plans to live in the home then the tenant may only be entitled to 90 days advance notice before being served with notice to vacate. This scenario is rare as most purchasers of occupied foreclosed homes are either the bank or investors who do not plan to live in the home.
If the purchaser does not plan to live in the home then the tenant with a signed written lease agreement may be entitled to remain in the home for up to 1 year or the duration of the lease whichever is shorter. This protection does not apply if the tenant is related to the prior landlord/debtor or the rent is substantially below fair market value.
Only ninety (90) days protection before a notice to vacate if:
For those afforded the maximum protections under the Statute it is important to note the purchaser is under no obligation to renew the lease. The maximum one (1) year protection, assuming the lease does not expire earlier, begins the day the purchaser obtains title to the house.
What are the risks to tenants under this statute?
If you have a brand new landlord who does want you to remain in the house he or she may not make necessary repairs in a timely manner. This may include not fixing vital appliances including the refrigerator or even the air conditioner or furnace. Although the terms of the lease may still apply requiring the new landlord to make repairs your house may become virtually uninhabitable before you have time to apply to the Court for relief.
What if a tenant wants to end the lease early?
The tenant may terminate a lease early based upon notice of foreclosure if they are in a single family home or in real property containing less than fifteen (15) units. There are strict time requirements to elect this option for the tenant and the homeowner does have the right to cure the mortgage deficiency as well.
What should a tenant do before signing a lease?
If you are looking to rent from an individual as opposed to a company it would be prudent to demand to see proof the mortgage is current before you sign a lease. This can be accomplished by viewing a recent statement (demand to see all statements if multiple mortgages). If you notice the house is underwater (more is owed than the house is worth) then you should be on high alert. During the foreclosure crisis many homes in pre-foreclosure were rented to unsuspecting tenants. What made matters even worse was many times the owners did not even apply collected rent payments to the mortgage, which further accelerated the foreclosure process. Another warning sign is a landlord who is moving to another State. Even if they plan to keep the mortgage current they may not be around to make repairs in a timely fashion.