Foreclosure Timeline: After the Sale

If you're still living in your (former) home following the foreclosure sale, you go from homeowner to tenant after a deed has been recorded with a new owner's name. A common misconception is that you aren't legally a tenant unless you've entered a formal landlord–tenant relationship and agreed to pay rent. But, subject to a couple of exceptions, you're considered a tenant, typically termed a "tenant at will" or "tenant by sufferance."

Once you legally become a tenant, the property's new owner will probably evict you. The first step the new owner takes in an eviction is typically to send a written notice stating that you must move out.

How soon you'll get such a notice generally depends on who owns your house after the foreclosure sale: a third-party buyer or the foreclosing bank.

If a Third Party Buys the House at the Foreclosure Sale

If, at the foreclosure sale, your house is sold to a third party, that new owner will likely want possession of the property as soon as possible. You might receive a termination notice days or weeks after the auction or sale. Exactly when you can expect this termination notice will depend on the new owner's agenda and the new owner's experience in removing tenants.

You can expect the notice to come sooner rather than later if the new owner wants to occupy the house and has experience evicting tenants. If, on the other hand, the new owner is a business that buys and resells foreclosed homes, you might experience a delay before you get a termination notice. And if the new owner is a novice in buying foreclosed homes and has no experience in evictions, you can expect a delay while the new owner finds a lawyer to handle the process.

If the Foreclosing Bank Ends Up With the House

If the property isn't sold to a new owner at the foreclosure sale—nobody makes a bid higher than the bank's credit bid—the foreclosing bank will end up with title to the property.

If your house is in an area where values are relatively stable, few other homes are for sale in the neighborhood, and it's in saleable condition, the bank will likely want you out quickly and move forward with an eviction. In some places, the bank includes an eviction as part of a judicial foreclosure, while in others, the bank has to file a separate proceeding after a nonjudicial foreclosure.

Getting Paid to Move Out Voluntarily

Your termination notice might be accompanied by an offer to pay you a lump sum if you leave the property by a specific time and leave it in good condition. This kind of offer is commonly called "cash for keys."

Some former homeowners report offers as high as several thousand dollars, which, from the new owner's perspective, is usually cheap compared to what it would cost the owner if you dug in your heels and made a formal eviction necessary. Also, experience shows that unhappy former homeowners can do a remarkable amount of damage to a house if they think the new owner is being unreasonable.

Not all buyers or banks will make this sort of offer and might be willing to spend hundreds or even thousands of dollars in lawyer fees to get you out. That said, you should always be willing to propose a move-out bonus if the new owner doesn't. And if the new owner does propose one, you shouldn't be shy about negotiating for a higher amount.

Talk to a Foreclosure Attorney

If you're uncomfortable negotiating a cash-for-keys deal or have questions about how long you can legally live in the property, consider talking to a foreclosure attorney. A lawyer can explain your options before and after a foreclosure sale, inform you about foreclosure procedures in your state, and help you work out a cash-for-keys deal to help cover your relocation costs.

If you can't afford to hire a lawyer, contact a HUD-approved housing counselor.