Your Options After the Foreclosure Sale

Learn about your potential options after a foreclosure sale.

By , Attorney

If you're currently going through a foreclosure or your home was recently sold in a foreclosure sale, and you haven't moved out yet, you might want to know what happens next.

Some homeowners quickly leave their home either before or after the property is sold. But depending on the circumstances and your state's laws, you might have other options, like staying in the home for a more extended amount of time, getting paid to move out, or even buying the home back.

Redeeming the Home: Buying the Home Back

Sometimes, state law permits foreclosed homeowners to buy their home back, called "redeeming" the home, within a specific amount of time, called a "redemption period," after the sale.

To redeem the home, you usually have to pay the total purchase price, plus interest, and any allowable costs, to the purchaser who bought it at the foreclosure sale. In some states, though, you'll have to pay the total amount owed on the mortgage loan, plus interest and expenses. The deadline and procedures for exercising a right of redemption vary from state to state, and not all states provide a redemption period after the sale.

Living in the Home During the Redemption Period for Free

If your state provides a redemption period after the sale, you might get the right to live in the home payment-free during this time.

In Michigan, for example, most homeowners get a six-month redemption period, though some people get a year, during which time they can live in the home. Under certain circumstances, though, like if the foreclosed homeowner unreasonably refuses to allow the purchaser to inspect the home, the purchaser can begin an eviction sooner. To learn more about your rights during the redemption period in your state, if state law provides one, consider talking to a local foreclosure attorney.

By staying in the home during the redemption period, you can save money by living payment-free. You can use the money that you otherwise would have spent on housing to pay other bills and start rebuilding your credit.

Remaining in the Home as a Tenant

You might be able to remain in the home as a tenant after a foreclosure sale. Some lenders and investors offer programs that allow recently foreclosed homeowners to rent their former property after losing it to a foreclosure.

Living in the Home Until You're Evicted

If you don't move out after the purchaser gets title to the home, typically either after the sale or after the redemption period, the new owner (often the foreclosing party) will start eviction proceedings to remove you from the property. The length and procedures for the eviction process vary from state to state.

Depending on your state's law and the circumstances of your case, the foreclosing party might be able to include the eviction as part of the foreclosure action. Or the new owner could have to file a separate eviction lawsuit with the court following the foreclosure. You might receive a notice, usually called a notice to quit, prior to the eviction action. This notice typically gives the foreclosed homeowners a certain amount of time, like three days, to leave the home before the eviction officially begins. While you can stay in the property until you're forcibly removed through the eviction process, it's generally best to leave before the deadline to move out given in the notice expires.

Getting a Cash-for-Keys Deal

To avoid having to complete an eviction, the new owner might offer you a "cash-for-keys" deal. With this arrangement, you agree to leave the home by a specific date, and in good condition. In exchange, the new owner gives you a specified amount of cash to help pay for your relocation costs.

You can request a cash-for-keys agreement if the new owner doesn't offer you one.

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To find out more about your options and rights after a foreclosure, consider talking to a local foreclosure attorney.

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