Indiana Bill Protects Tenants in Foreclosure

Indiana House Bill 1081 passed both houses of the Indiana legislature. This bill was intended to deal with the surprise encountered by tenants who find out that the property they are renting has been foreclosed upon.

On occasion, the first time a tenant might learn of the foreclosure is when the Sheriff arrives with an order to clear the property. Currently, it has been sent to conference committee for further work intended to enhance the right of residential tenants in foreclosure actions. The bill, as currently written, gives residential tenants new rights in foreclosure proceedings. It applies only to buildings or residences containing four (4) or less rental units. It gives the tenants a right to terminate a lease upon foreclosure, and not forfeit their deposit for early termination. Also, the bill provides that a tenant who is not in default under their lease agreement cannot be evicted for at least ninety (90) days after notice of the foreclosure proceedings. The bill encompasses several notice provisions on property covered by the bill. It does not apply if a receiver has been appointed. During the pendency of a foreclosure action, a court may require that rental be paid into court for the repair and maintenance of the rental property. The bill originally afforded commercial tenants similar rights, but after objections from industry groups, the legislature was convinced that those provisions should be removed.

Posted by: Howard R. Cohen

Categories: Foreclosures