Many of our clients have contacted us to ask what happens when the house a tenant is leasing or renting is sold at foreclosure. Landlord-tenant law and foreclosure law in Georgia historically have been local matters with the Georgia legislature enacting the controlling law. Also, historically, Congress would enact a federal law when a compelling federal interest might arise, such as protecting our military soldiers against actions by lenders, lawsuits, and evictions while deployed or upon their return.
The Service Members Civil Relief Act is such a federal law which protects our servicemen and which takes priority over ("preempts") state laws. The disadvantages suffered by tenants in Georgia caused by the foreclosure of property which the tenant used as a residence were reduced dramatically by the relief provided in a federal law enacted on May 20, 2009.
Prior to May 20, 2009, the law gave a tenant no greater right to remain on the property after a foreclosure than the former owner-landlord had. This applied to both a tenant with a lease or a tenant without a lease (a "tenant-at- will" who was legally in possession of the premises but who rented month-to-month with no agreed upon time to vacate the premises) who had a landlord-tenant relationship with the owner of property which had been foreclosed. The tenant was, figuratively, "up a creek without a paddle."
Upon foreclosure, the legal status of the former owner-landlord was reduced to that of a "tenant-at sufferance" who could be evicted from the property by a Dispossessory Proceeding filed by the new owner of the property. Since the landlord-tenant relationship with the former owner was terminated by the foreclosure, the former tenant could also be evicted by the new owner.
Stay tuned for Part II…