When homeowners face foreclosure on a property they are renting out, tenants often begin to worry about the status of their home. Will the landlord be able to avoid foreclosure? Should the tenants stop paying rent? Will the new owner at the auction evict them, or will the purchaser honor the lease agreement? Unfortunately, many of these questions exist due to differences in the treatment of tenants under state law.

Many times, the first action a purchaser at a foreclosure auction takes is to begin the process of evicting former owners or tenants, whether this action is legal or not. In many cases, although it is not legal, the new owners will pursue this anyway in their effort to take possession of the property as quickly as possible. If this happens, it is usually up to the tenants to assert their rights under the lease.

Much of the confusion rests on two related issues. The first is that tenants' rights after a foreclosure are defined under state law, and each state will treat the issue slightly differently. Another issue is that tenants are the group most forgotten about in all of the efforts and discussion to help homeowners stop foreclosure. Protecting the rights of the renter is far down the list of priorities for most politicians attempting to help homeowners save their homes.

Tenants in different situations will have different rights. State law plays a large role, as does the nature of the lease itself. For instance, a lease that was entered into before the mortgage was placed on the property will usually survive a foreclosure. The lease existed before the mortgage was entered into, while the mortgage was in default, and during the foreclosure process. A purchaser at auction will not receive a greater interest in the property than existed before the mortgage.

There are two different views on the much more common issue of a lease entered into after a mortgage is executed. The majority opinion is that a lease will survive foreclosure if the lender is on notice that the tenancy exists. The exception to this rule is if the foreclosing lender makes the tenants are party to the foreclosure lawsuit; in this case, the lease may be exterminated after the foreclosure is completed.

Another view on this issue is that the foreclosure terminates the lease whether or not the tenants are made a party to the foreclosure lawsuit. In cases of nonjudicial foreclosure through a power of sale clause, most courts have held that the foreclosure extinguishes the tenants' rights in the property under the lease agreement. This gives tenants very few rights to defend their interest in the home.

One issue that homeowners, lenders, and tenants need to be aware of is that of the notice requirement mentioned above. If the lender has notice of the lease agreement, either actual or constructive, and does not include the tenants in the foreclosure proceedings, the lease will most likely survive the foreclosure auction. This makes the notice extremely important for tenants, foreclosing lenders, and purchasers at auction.

A number of different documents or actions can provide notice to the lender of the lease agreement. A recorded lease provides notice, for example. Also, if it should be apparent that tenants are living in the property, the lender may have the responsibility of investigating to determine the tenants' claims. An apartment building or property with more than one unit may also provide notice just by the nature of the building itself.

Homeowners are usually somewhat lacking in their efforts to help tenants deal with the foreclosure process. This often leaves renters on their own to figure out how to respond, and many end up not paying rent and being evicted quickly after a foreclosure auction. Unfortunately, this is often the worst possible scenario, and may not even be legal. But too few tenants know their rights after the home they are renting is foreclosed.

When a home goes into foreclosure while there is an active lease agreement, the lease must be honored by both the homeowners and the tenants. This can be true even after the sheriff sale of the house for a minimum of ninety days during the confirmation process of the auction. This is a new law that came into effect this year, shortly after President Obama took office.

In some cases, the lender will get the home back at the public auction and the lease will go on as usual; the former renters will just be making payments to the bank that buys the house at the sale, rather than the former homeowner. Another option is to make an agreement with the landlord to end the lease and get a credit for the security deposit. This can be applied to the final month of rent if the landlord no longer has the cash to refund the security deposit to end the lease.

Unless the tenants get a written agreement with their landlord to end the lease, they will still be responsible for making the monthly payments, regardless of what legal problems the owner is facing. This definitely includes the case of foreclosure -- renters will need to keep paying until the owner's interest in the property is transferred through the auction.

The best advice for renters in this situation may be to make sure they keep updated on what is happening with the foreclosure process. They can do this by viewing the public record at the county courthouse. In the event the home is sold at a sheriff sale, the tenants should immediately contact the new owner and try to find out what their options are.

Many people will recommend attempting to purchase the home and take over payments. This may not be the best option, though, and will only be appropriate in a limited number of cases. In other situations, this is the worst advice anyone could give, especially without knowing anything about the condition of the property or the tenants' financial circumstances.

If the renters would really like to break the lease immediately and move on to a more stable situation, their best option is to work out a deal with the landlord. Most landlords are not familiar with the foreclosure process or any of the new laws that affect renters in the event of a foreclosure. This can work to the advantage of the tenants in negotiating a solution to avoid being evicted after a sheriff sale.

Tenants can simply explain to the landlord that they need to break the lease because they are now aware that they will not be legally capable of living up to their part of the agreement as required by the lease. No renter wants to live week to week, not knowing when the sheriff is going to show up and evict them, giving them twenty minutes to remove their belongings. Some courts will also side with the renter, in this type of case, but it is probably not worth hiring an attorney and sue the landlord to get a small deposit back.

A final issue for renters to consider is that many people are able to save their home from foreclosure. Companies, foreclosure specialists, banks, and mortgage servicers help people find solutions to allow them to keep their homes every week, by using a loan modification, refinance, or other workout plan. It is entirely possible that the landlord will be able to keep the home and the foreclosure will not affect the lease whatsoever -- and in that situation, the worst action for tenants to take would be voluntarily not paying the lease.

News stories and studies reporting the dramatic decline in the economy are poor substitutes for the actual experiences people are going through. Job losses, foreclosures, evictions, and the lack of "promised" government services are just a few of the phenomena of the current depression. As well, new tactics of governments and banks to make the downturn as painful as possible on the people are being discovered everyday.

Take, for instance, the following report from Vanguard on the state of the local economy, housing market, and government of Las Vegas, Nevada. For homeowners or people leasing properties, the first ten minutes are especially relevant.

During the boom years, thousands of people were moving into the area every month. Now, with the collapse of the economy, just the opposite is the case, with thousands moving out before they are evicted from rentals or foreclosed homes.

The most disturbing part of the above video, though, is the so-called "immediate eviction" of the family of renters, who were given no notice that they were to be removed from the property. The former homeowner did not tell them the house had been lost to foreclosure, the new bank owner did not inform them, and the county sheriff's office itself did not post a notice on the house days before announcing the eviction.

In effect, the family was given roughly twenty minutes to move out as many of their belongings as possible before all of the locks were changed and the sheriff's deputies moved on to the next eviction, of which this was just one of sixteen total that day. That means, even in a best case scenario of eight hours of work with no driving time lost between lockouts, people are given an average of a half hour to move out. With no notice!

This is really theft, pure and simple. The former homeowners are negligent and immoral in not informing renters of the eviction. The banks are as cruel as ever in wanting the home back without caring whether people leasing are informed or not. And the bureaucrats are more interested in following their marching orders from the bank-owned courts and banks themselves in giving no notice before an eviction.

Just like with forfeiture laws or armed criminals robbing people with the threat of jail time if they do not give up cash or belongings, this immediate eviction procedure is little more than a way for local governments to engage in "legal" theft from tenants who have lost everything, have nowhere to go, and can not afford legal or political representation.

Any and all renters should be aware of the possibility of their landlord being in foreclosure and having the county sheriff's office come to their door to perform an immediate eviction. Nevada is not the only state where this process is allowed (as a search of Google will reveal), and it is up to every tenant to protect their families and properties from the negligence of landlords, the cold indifference of banks, and the theft of government.

With thousands of homes sitting vacant across the nation, each one a casualty of the foreclosure crisis, and some sheriffs reacting to the crisis by refusing to evict tenants or service lawsuit notices, the question is raised: why don't banks just rent out foreclosed homes? Although it may seem like a self-evident solution to keep more people in properties and prevent them from deteriorating due to lack of maintenance, there is a financial reason that banks do not rent out foreclosed homes.

For instance, if you have a landlord and something happens to your or your family as a result of the landlord's negligence and failure to keep the property in reasonably good shape, you can sue and possibly win a judgment for tens of thousands of dollars, depending on all the circumstances of what happened. Even if you do not win the lawsuit against the owner of the property, it may cost the landlord thousands of dollars in legal fees defending against you in court.

Why people rent out properties in the first place in the face of this legal risk may be uncertain, but many landlords only have one or a handful of properties they manage. Thus, the risks of being sued and losing and having to pay a large amount of money are relatively small. Because many property owners do not have deep pockets, it is unlikely a judge would award you or any other tenant millions of dollars in damages and penalties on the landlord. It would simply be impossible for the total amount ever to be paid back and would qualify as cruel or unusual punishment.

Banks, on the other hand, can be sued for ten or one hundred times the amount of a typical landlord because they typically have hundreds of millions or billions of dollars in assets. If a bank has to pay a few thousand dollars in punitive damages, that is nothing to the firm in the overall scheme of things. And it is worth your time as a renter to get injured on the property and bring a lawsuit for millions of dollars against the mortgage company acting as a landlord.

Even if you are only awarded a few thousand dollars, the bank will probably pay it quickly. It costs you quite a bit less to initiate a lawsuit asking for millions of dollars in damages against the mortgage company than it costs the bank to defend against such a case. The bank will have to hire local attorneys and spend potentially tens of thousands of dollars in legal fees just to avoid having to spend even more money later on if they do not defend the lawsuit.

And since some banks may have dozens or hundreds of properties in foreclosure in numerous states that could be rented out, they leave themselves open to the possibility of being sued perpetually by tenants attempting to cash in. Especially because banks do no upkeep to foreclosed homes, the chances of a renter being injured due to the bank's negligence is much higher than if the property had been owned locally by a private citizen.

Because of this, banks do not even bother renting out properties that they have foreclosed on. They would rather the homes sit empty and abandoned, as opposed to opening themselves up for lawsuits based on the condition of houses they are doing nothing to take care of. Even if banks lost one or two lawsuits to renters, it may cost them millions of dollars they would otherwise not pay by leaving the houses to sit on the open market for months, empty and abandoned and dragging down the quality of the community.

Finding out that you are renting a house that is facing foreclosure can be deeply worrisome. And the worst part is that there are so many questions that you may never receive a response to from your landlord and have to begin researching on your own.

How far along is the process? Has the house already been sold at sheriff sale? Who is the current owner of the property? Which bank is the foreclosing lender? Can you get more time to move out? Or has the landlord been working on a solution?

But the most common question that tenants seem to have when they discover their apartment or rental house is in foreclosure is if they still have to pay rent or not. Of course, this is a serious question, but it is more important to know who should be paid, rather than if a payment should me made at all.

The short answer is that you are still required to pay rent since you are still living in the property and using the space you are leasing from the current owners. You have a contractual obligation to pay rent in exchange for the living space, and foreclosure does not change that until ownership is transferred through a public property auction.

If you are concerned about the foreclosure, then you have two options, both of which you should work on. First you can either move out as soon as possible to avoid potentially being evicted later on, or, second, you should talk to the landlord about what he is doing about the situation and any possible solutions to foreclosure.

Some landlords are able to stop the foreclosure process before the house is auctioned off, and then you would just be behind on rent if you stopped paying now and they saved the home. You would probably end up losing your deposit in that case, since nonpayment is one reason you had to put down the deposit in the first place, and you may open yourself up to lawsuits for back rent payments.

You can also move out of the house claiming constructive eviction, which means the conditions made it so unlivable that there was no other choice than to break the lease and leave. If the owner does not give you your deposit back, you can try to sue for it later on. You would just have to convince the small claims court that a pending foreclosure was a reason to move out prematurely.

A final aspect of the process to be aware of is after the sheriff sale, the bank may become the owner of the property and rent payments will need to be made either to a trustee or the lender's attorneys. Most often, banks will attempt to evict anyone still living in the house after the auction, but if there is a chance to continue renting, it may be best to consider the circumstances.

But you do not just want to stop paying rent unless you have the correct information about the foreclosure proceedings, what the owner is doing about it, or a game plan for moving out and claiming constructive eviction. Otherwise, refusing to pay rent because of a pending foreclosure may have negative unintended consequences, depending on how the rest of the legal process plays out.

Renters who find out that the home they are living in may be involved in a foreclosure or bankruptcy are usually rightfully worried about what will happen to them. The bank could kick them out at any time or they may offer a cash for keys deal if the foreclosure has already gone through; when landlords keep tenants in the dark, everything is uncertain. But tenants need to find out what is the current status of the property in order to plan either for moving or staying put.

If someone renting a property suspects the house they are renting is involved in a foreclosure or bankruptcy, they need to find out as quickly as possible if this is true and which legal procedure it is involved in. The bank and the courts will treat occupants of a property differently in foreclosure and bankruptcy situations; planning for moving out or getting any money through a cash for keys deal is impossible if the tenants do not know what is the status of the property. The status can be found out through asking the landlord or, if the owners are not responsive, by calling the local district or bankruptcy court and request a search of their records.

In a foreclosure, the bank will attempt to sue the owners of the house and take possession of the property by having the local government auction the property to satisfy the defaulted mortgage loan. The bank is usually the buyer of foreclosed houses at county sheriff sales, so once it has become the owner, it will attempt to evict anyone still living in the foreclosed home. In order to facilitate a peaceful transfer of the property, the bank may offer any lingering occupants a cash for keys deal, but not all banks do this -- tenants may want to call and find out what the lender can offer in the way of money to move out.

But a house in bankruptcy proceedings is completely different. If the homeowners filed bankruptcy because they were behind on the mortgage, it means they are seeking protection in the courts to get a chance to repay the defaulted portion of the loan and get back on track. The foreclosure process is completely on hold at this point, and there is no danger of either the tenants of the original owners of having the house auctioned off, being evicted by the bank, or being offered a cash for keys deal. None of these actions may be taken if the mortgage is involved in a Chapter 13 bankruptcy.

Unless the homeowners fall behind on the bankruptcy payment plan, the mortgage company can not move forward with any aspect of their foreclosure lawsuit against the owners. Bankruptcy grants homeowners relief from any collection efforts, including foreclosure, for as long as their debts are tied up in court under the Chapter 13. If they manage to make it all the way through the payment plan, then they are out of bankruptcy and foreclosure. Tenants have to keep paying rent to stay in the property, since the original owners still have legal title.

So people renting a house who suspect their landlords have fallen behind in the mortgage have to find out if the house is involved in either foreclosure or bankruptcy proceedings to know what will happen next. A property can not be in both situations at once, since filing bankruptcy will immediately stop foreclosure and put a hold on the sheriff sale. Either the renters may be in danger of eviction but can ask for a cash for keys deal, or they have to keep paying rent to the owners in order to keep living in the house, regardless of any bankruptcy proceedings.

With the record foreclosure rates, many homeowners are able to see the tragedy coming. Once they know they will lose a job, or a medical crisis suddenly hits, it is just a matter of time before the mortgage payment is missed, and homeowners know it. But, what happens if you are just renting your home and the landlord falls behind on the bills?

In this case, you may not find out until long after the fact that there is a problem, especially if the owners do not say anything. They may, of course, finally inform you of the foreclosure problem when the sheriff sale is approaching, but this may give you only a small amount of time to find a new place to move. And how much time do you have, exactly?

If you are renting a property that you have recently found out is in foreclosure, you need to find out what part of the foreclosure process the house is in, and determine if there is a redemption period after the sheriff sale.

Unfortunately, because of their limited rights to the property, renters have fewer options available to them to stop foreclosure before the process goes all the way through. Thus, they have to rely on the landlords much more than they would probably like.

Find out from the owners if a sheriff sale has been scheduled yet with the county. The county courthouse or sheriffs office will also have this information. Knowing the foreclosure auction date will give you a good estimate of when the landlords will no longer be the owners of the house. The sheriff sale transfers ownership of the property to the purchaser at the auction, which is usually the foreclosing bank itself who buys the property back.

After knowing when the sheriff sale will take place, look up your state foreclosure laws to find out if there is a redemption period after the sale. If there is no redemption, then you have to move out soon after the foreclosure auction, or you will be evicted. In fact, the eviction may take place within as little as two weeks after the sale. It is possible to negotiate with the lender for more time, but there is no guarantee to be given extra time to move out.

However, if there is a redemption period, you can stay living in the house until after the period is over. This is a length of time guaranteed by state law for homeowners to keep possession of the house and attempt to pay off the amount owed or sell the property outright. So the bank can not evict you until after the period is over, no matter how much they would like to do so.

In some cases, after the foreclosure the bank will offer to give you (or the landlords if they are still in the picture) a thousand dollars or so just to move out. This is called a "cash for keys" deal, and the amount offered will not be very much. Banks do it as a sign of good faith, and as an attempt to persuade homeowners to leave the property in good condition without destroying anything or stealing all of the copper pipes to sell for moving expenses, or ripping out the water heater and furnace.

But how long you have depends on how much time has already expired and what the state foreclosure laws have to say. One of these pieces of information can be obtained from the landlord or through county officials, and the other is freely available online on any number of foreclosure websites, as well as official state websites which will have the exact language of the foreclosure laws.

Tenants are often some of the last people to find out the house they are renting is going into foreclosure. The landlord often withholds this information, fearing that, if the renters knew of the pending foreclosure, they would stop paying rent, and the landlord would not have this money to rely on if he is attempting to stop foreclosure or just use the money to move on with his family's life after the process has ended. In all honesty, the tenants are still bound to the terms of the lease as long as the landlord still owns the home, and a pending foreclosure would not alter that fact. If the homeowners are unable to find a solution, though, it may be in the tenants' best interest to attempt purchasing the house, either before or after the foreclosure has gone through. This may allow them to make the jump from renter to owner, and avoid having to move out of a house that will soon be evicted by the county sheriff.

The first question that homeowners usually have is who should they buy the property from. They can make an offer to the landlord now, but the owners may want the full market value of the property, in order to pay off the loan in full and use as much of the proceeds as possible to begin recovering from the foreclosure. Of course, they may be willing to give a good deal to the tenants, who are helping them out of the difficult situation, and this humanitarian motive to purchase the home before the sheriff sale should be considered by the renters. However, if the landlord demands full market value, and is unwilling to work with the tenants, assuming an "all or nothing" attitude, another approach may result in a better deal for the potential home buyers.

In this case, where the landlord is unwilling to sell the home for less than full price, thereby giving the tenants a good deal for helping stop the foreclosure process, it may be wiser to wait until after the foreclosure auction when the landlord is no longer the legal owner of the property. He will no longer be able to negotiate a sale on a property he no longer has any interest in. It may be better for the potential buyers to work with the bank after the foreclosure sale to get a better price. There are good and bad points about this approach, though, both of which must be taken into account before moving forward with this option.

First, the bad. The tenants absolutely must contact the bank before the sheriff sale or very, very soon after in order to tell the lender they are interested in purchasing the home and that they are currently living there as tenants of the previous owner. During the entire foreclosure process, they should try and save up for a down payment and get qualified for a loan as soon as possible, so they can prove to the bank that they are serious about buying the house, working towards that goal, and not just trying to avoid getting evicted. The bank will have to inspect the house and have it appraised before they accept any offer, of course, so the tenants can expect the mortgage company to send out a Realtor or appraiser to get an accurate value.

This is assuming the bank buys the property back at the foreclosure auction, of course. This happens almost all of the time, but there is a chance a third party interested in the home will purchase the house and want to move in or hold it as an investment. They may be understanding of the renter's situation and willing to sell the property they just purchased for market value, but then the renter's potential great deal will turn into buying a house for full price. This is an outside chance, but worth mentioning, as it can put the renters back in the same bargaining position they were in with the landlord demanding full price to sell the property to stop foreclosure.

Now for the good aspects of purchasing a home after the sheriff sale. The first is the fact that the mortgage company will be willing to sell quick and for a small gain on what they purchase it for at the sheriff sale. The tenants need to find out what the selling price was at auction and what the true market value of the property is currently estimated to be. This will help them determine how much to offer the bank, although a wise bet would be to offer an amount somewhere in the middle of the auction price and the market value and back up the offer with a contract and qualification letter. If the offer is not made with a valid contract and some proof of being qualified for a loan, the bank will not take the entire process seriously, as there is no documentation to persuade them to hold off on the eviction process.

As long as the bank knows that the potential buyers are working on getting the home and can document the mortgage process as it goes along, the will be willing to hold off on the eviction process for a reasonable length of time. They will not want to pay to evict someone through the court system if the current tenants are trying to buy the house. However, they will not wait forever for the loan to go through, and a closing date should be sought after as quickly as possible. Every minor delay or setback can cause the bank to change its mind, decide not to extend the contract, and pursue the eviction and list the property on the open market. Time is of the essence in this situation.

Finding out that one is renting a home in the middle of the foreclosure process is often quite worrying to tenants. Although they are not legally released from the obligation to pay rent to the landlord for as long as he is the owner of the property, foreclosing banks will be quite sympathetic to renters in this situation. As long as the tenants become aware of the foreclosure with some time to spare, they may be able to get the funds together to quality to purchase the home and avoid being evicted. They may also have the opportunity to help out the landlord by assisting in the effort to avoid foreclosure and purchase the property before the sheriff sale. If this is not possible, even greater deals may await after the foreclosure auction has taken place. Although being a tenant in foreclosure can seem like one of the most distressing situation to find oneself in, the tenants themselves can turn it into a win-win situation.

A growing problem seems to be that many tenants find that the house or apartment building they are renting is going into foreclosure, due to the inability of the owner to continue paying the mortgage. The tenants are arguably in an even worse situation than the homeowners themselves at this point, because they have no control over the process of finding a solution that will stop foreclosure and allow them to remain in the home. They are also bound by the lease agreement, and risk the negative consequences of breaking the contract before its term has expired. However, there are a number of suggestions for tenants in this situation who are concerned with helping the landlord keep the property or just securing their own living arrangements beyond the foreclosure.

The actual sequence of events will, of course, depend on what happens throughout the foreclosure process, which is determined by the state foreclosure laws. Just because the property is in foreclosure, though, does not automatically mean the homeowner has lost the property yet. In other words, it may be hasty to give up hope and begin moving out right away. Any tenant in the building will want to discuss the pending foreclosure with the landlord as soon as possible, though, to determine what the problem is and if there is any way to save the home and avoid the foreclosure process entirely.

If the homeowners have a plan to stop foreclosure, the tenants may begin the process of looking for new places to move to, but holding them as backup plans, rather than immediately moving out. In the event that the owners can not save the property, then the tenants will have to determine how much longer they have until the foreclosure process is over, and if there is a redemption period after the sheriff sale, in order to plan their moving out of the property. This time period is another aspect determined by state foreclosure laws, and tenants should also seek out independent foreclosure advice to educate themselves on what may happen to them throughout the process, as well as their rights once ownership of the property transfers after the sheriff sale.

In most cases, once the sheriff sale has been conducted, the homeowners and the tenants will no longer be able to remain in the property. This is because the new owner, which is usually the foreclosing bank, will initiate the eviction process in the local courts and request possession of the house. If the tenants do not know how much longer they may have to keep living in the property after foreclosure, they can call the county sheriffs department to find out if and when the foreclosure auction took place, and if there is an eviction date scheduled yet. The sheriffs office will conduct the eviction, so they will know if the court has ordered it yet.

However, in a small minority of cases, the lender's attorneys will take over collecting rent payments from the tenants. The renters would receive a letter from the lawyers office informing them of their responsibility to continue paying the lease as agreed and that payments will now be made out to their office. However, this is a much less common result than the bank simply asking for possession of the property and beginning the process of evicting any remaining tenants or homeowners.

Tenants who are experiencing their own foreclosure crisis are best served by discussing the matter with the current owners of the property and examining what options are available to prevent the loss of the home and stop foreclosure. However, renters in this situation should also keep a backup plan in the event that the house is sold at sheriff sale and ownership is transferred, resulting in the beginning of the eviction process. It is unfortunate, but true, that plans to save a home from foreclosure often fall through at the last minute, especially if the homeowners are relying on a magical foreclosure loan or other option that is equally difficult to qualify for. Tenants should gather as much foreclosure information as they can and begin the process of planning for their future no matter what happens with the current property in foreclosure.

Sometimes, a homeowner falls into foreclosure with an investment property and a tenant is currently living in the building. Especially when the landlord disappars and abandons the property, the tenant may feel very insecure during the entire foreclosure process. This is because they usually will not have any right to remain in the property if the house is sold at sheriff sale, and they are unable to talk to the lender about the loan, since they are not authorized to speak about the mortgage.

However, many tenants in a situation like this can attempt to purchase the home, even if it is after the sheriff sale. They do not have to become another victim to the foreclosure process, and may end up with a good deal on the house, without having to move out or be evicted from the property. The first question for the tenants will be who is the current owner of the property.

They will have to find out if the state's redemption period laws apply in the case of the house, or if the bank is now the legal owner of the property. This will indicate to the tenants who is the correct party to speak to about purchasing the home. A homeowner who has lost possession and ownership of the property can no longer request rent payments, or sell the property.

If the bank owns the property now, the tenants interested in purchasing can contact the lender as soon as possible to let them know the situation and that they would like to attempt to purchase the property and avoid eviction. As soon as possible, the bank will probably want to see a sales contract or proof that the tenants are working on getting financing for the property (loan application, preapproval letter, etc.).

In the case of the landlord still being the owner and having a redemption period either before or after the sheriff sale, the tenants can try purchasing the property from the landlord, if he has not simply abandoned the house. The tenants should try to purchase the property for as little as possible to get him out, pay off the defaulted loan, and get a good deal. If he's unwilling to sell in the current situation, and is working on some solution to remain in possession of the house, the tenants can wait until the redemption period has expired and then try purchasing from the bank or new owner.

If the landlord is no longer the owner anymore, though, the current lease with him is no longer any good. The bank will evict the tenants if they do not contact them and get some time to purchase the property without having to move out. Banks are generally willing to postone eviction proceedings as long as there is a strong possibility of having a buyer who can purchase the property very quickly. The tenants need to find out who is the listing real estate agent for the property, as well, if one is involved. The agent is usually someone local that they can meet with and submit their offer to purchase the home.

Getting mortgage help is a very tough process for anyone in foreclosure, but the diminished ownership rights that come with being a tenant in a foreclosed property present special challenges. However, it is very possible for rentors to come out of the situation in a better position as new homeowners of a discounted foreclosure property. They will now be the ones in control of the property and will be able to enjoy the benefits of owning the home they have lived in and had been paying rent on.