North Carolina Renters Caught in Foreclosure: What Are Your Rights?

North Carolina law, along with federal law, often allows a tenant whose landlord loses the rental house to foreclosure to stay in the home longer.

If you're a renter in North Carolina caught in the crossfire of a foreclosure, federal and state law can help you stay in the home through the end of your lease or at least for a few months, depending on the circumstances. If you don’t have a lease—or the lease is terminable at will—you’ll also get some much needed extra time to find a new place to live.

Read on to find out how both federal and North Carolina law protects renters who are often innocent victims when their landlord goes through a foreclosure.

Federal Law: Protecting Tenants at Foreclosure Act of 2009

On May 20, 2009, President Obama signed into law the Protecting Tenants at Foreclosure Act (PTFA). Under this law, tenants are generally permitted to stay in the home after a foreclosure until the end of an existing lease. Though, if the new owner who bought the home at the foreclosure sale intends to occupy the property, the owner can terminate the lease with 90 days' notice to the tenants. Tenants without a lease, or a lease that’s terminable at will, are entitled to 90 days' notice before having to leave the property. (To learn more about tenant’s rights in foreclosure, read Protections for Tenants After a Landlord’s Foreclosure.)

The PTFA previously expired on December 31, 2014. But on May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155), which repealed the PTFA’s sunset date. So, the PTFA is back in effect permanently as of June 23, 2018, which is 30 days following the enactment of S. 2155.

North Carolina Law: Protecting Renters After a Landlord Goes Through Foreclosure

When the PTFA expired in 2014, North Carolina, along with many other states, passed its own version of the law. North Carolina’s law is very similar to the PTFA.

Under North Carolina law, after a foreclosure, unless the new owner plans to live in the home, the owner takes title (ownership) to the property subject to the tenant's right to occupy the premises until:

  • the end of the remaining lease term, or
  • one calendar year from the date the new owner gets title, whichever is shorter. (N.C. Gen. Stat. § 45-21.33A).

To qualify for protection from eviction, the following conditions must apply.

  • The property must be a single-family residential property.
  • The tenant can’t be the debtor under the foreclosed promissory note and deed of trust, or the debtor’s child, spouse, or parent.
  • The lease must be in writing, not terminable at will, and require that the tenant pay rent that is not substantially less than the fair market rent for the home, unless the rent is reduced or subsidized due to a federal or state subsidy.

North Carolina law does not require the new owner to renew the lease. Also, if there is an imminently dangerous condition on the property when the new owner gets title to the home, then the tenant has no right to continue occupying the premises. (N.C. Gen. Stat. § 45-21.33A, § 42-42(a)(8)).

If the new owner plans to occupy the home, or if the tenant has an oral lease or a lease that terminable at will, the owner can get possession after giving a 90-day notice to vacate.

Getting Help

If you’re renting a home that’s going through foreclosure in North Carolina—or has already been foreclosed—and need help enforcing your rights, consider talking to an attorney.

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