Real Estate Law
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No, it is not unlawful to rent property and collect rental fees even though your house is in foreclosure. I don't know what fraud the tenant can complain of ... after all, you gave him exactly what he bargained for (i.e., a roof over his head). Despite that logic, I have certainly seen people argue that they shouldn't have to pay rent if the house is in foreclosure. I just can't understand their thinking. The lease is between you and the tenant. The mortgage is between you and your lender. The tenant has nothing to do with the mortgage.
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I looked on Westlaw, and could find nothing relevant. The problem is that there would only be case law if a tenant were to actually sue a landlord who was facing foreclosure, and it were appealed. In my opinion, the fact that there is no such case law indicates that the tenant has no case. If he did, then there would be lawsuits, and there would be appeals. I have never seen anything indicating that the tenant has any sort of case for the reasons stated earlier (which, quite frankly, is basic contract law). The bot***** *****ne is that tenants must pay rent because of their contractual obligations under the lease. A foreclosure doesn't alter those obligations. Moreover, Maryland specifically protects tenants who have a bona fide lease in that purchasers at a foreclosure sale must honor the lease. This further indicates that the tenant is not harmed by the foreclosure and has no legitimate complaint against the landlord.
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