Foreclosure Timeline: After You Get Notice to Leave
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When you get a notice demanding that you leave the house, it tells you how long you have to vacate the property. In most states, you’ll have five to 30 days. (Check our Summary of State Foreclosure Laws for specifics on your state.) In most states, once the time period runs out, you still can legally remain in the house until a sheriff physically evicts you under authority of a court order. With few exceptions, to get that court order, the new owner will have to file an eviction lawsuit (commonly called an unlawful detainer or forcible entry and detainer action). This eviction procedure can often take several months, giving you some additional time in your house payment free.
But forcing the landlord to take you to court has its downside. I usually advise people to be prepared to move at the end of the termination period rather than waiting until the new owner goes to court and gets an eviction order. If you are sued, it’s a matter of public record and can hurt your ability to rent or lease in the future. You’ll already have bad credit as a result of the foreclosure (or bankruptcy, if you go that route), and many landlords subscribe to private databases that screen prospective tenants for being on the wrong end of previous eviction lawsuits. That fact above all others can lead a prospective landlord to reject your application for a lease or rental agreement.
Another reason to avoid an eviction lawsuit is that if the new owner sues you for eviction, you might also end up on the hook for the rental value of the property for the period you remained in the house after the ownership change. This amount would be what the court determines is the fair rental value of the home. For instance, if comparable homes in the area rent for $1,000 a month, the judge might be willing to give the new owner a judgment against you for that amount. This kind of lawsuit would fly only if the new owner made a formal demand for reasonable rent going forward (which is rare), and you refused to pay it.
If you do face such a demand, you have at least two powerful arguments against it. To begin, in a time of rapidly declining home values, it’s next to impossible to assess the true rental value of a home, especially if there are a lot of vacant homes in your neighborhood due to foreclosures. Even if a judge felt that a fair rental value could be determined, you could argue that any rent you owed was more than offset by the fact that you maintained the house and that by staying there you prevented it from depreciating in value. This argument would work better if the new owner were your old lender; if a new owner wanted to move in but couldn’t because you refused to leave, the house wasn’t at risk of being vacant and neglected.
Consider filing for bankruptcy. When you’re pretty sure you’re going to have to give up your house, your prime concern becomes living there payment free for as long as possible. You may be able to extend that time if you file for Chapter 7 or Chapter 13 bankruptcy. Check out our article on How Bankruptcy Can Help With Foreclosure to find out whether you are eligible, whether you would benefit from filing for reasons other than delaying foreclosure, and other important information.