The fall-out continues over the [tag-tec]mortgage act[/tag-tec] passed by the house last week.
Some real estate investors as well as lenders are still reeling over new requirements attached to the bill.
One change is that new owners of foreclosed properties must honor an inherited tenant’s lease for up to six months.
No, I do not agree with this bill. I believe it is too hard-handed and too late to actually accomplish anything meaningful. The horse is already out of the barn, so to speak.
A real estate investor needs to be able to crunch the numbers on his new foreclosed property anyway he can in this market. He doesn’t need to be tethered with property management if that’s not his choice.
On the other hand, tenants can’t be thrown out of their homes over the exchange of an investment property. They did sign a lease in full faith
However, six months is entirely too much time to give them, in my opinion. 60 days would have probably provided ample time.
But one note of encouragement for real estate investors. Probably only a small number of foreclosures are actually occupied by tenants anyway. A lot of investors may not ever encounter this type of situation.
The house needn’t feel too smug about helping the underdog here.
Most local laws already cover most inherited tenants. In Tennessee, you can not throw out a tenant when you buy a property. You have to allow inherited tenants to finish their lease.
I know firsthand because I inherited two rather strange tenants when I bought my rehab a few years ago. Both moved quickly, even though one had not even been paying rent for most of her lease.
Still, never allow sudden property management responsibilities to overwhelm you. And certainly go ahead and buy the foreclosure if it’s a good deal. Inherited tenants should not come between you and your profit.