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Web Articles
                         Tenant's Rights when
                Leased Property is Foreclosed

Any ownership or possessory interests in real property that are
created later in time than the mortgage that encumbers the
property (such as an easement across the property that was
granted after the date of the mortgage) are considered junior
and subordinate to the mortgage.  The foreclosure of the
mortgage and the issuance by the appropriate Court of a
certificate of title, the document that actually transfers title to the
foreclosed property to the new owner, serves to automatically
negate and destroy most subordinate ownership and
possessory interests that may exist in the foreclosed property.

In Florida, subordinate leases are not automatically negated
and destroyed by a foreclosure of the mortgage.  However,
even though their rights are not automatically destroyed by the
foreclosure, a tenant’s rights to the property can still be
negated by the foreclosure if the tenant is joined in the
foreclosure proceedings and named as a defendant in the
foreclosure suit.

Therefore while leases in Florida do enjoy some procedural
protection in foreclosure proceedings (the subordinate lease
cannot be terminated by the foreclosure unless the tenant is
named as a defendant in the foreclosure suit) leases did not
enjoy an absolute statutory protection like some liens which
cannot be negated by a foreclosure proceeding even if the
benefited party is joined in the foreclosure proceedings (for
example liens for past due child support payments cannot be
negated by a foreclosure proceeding).  This obviously was
problematic for residential tenants because, in the event of a
foreclosure in which they were named as a defendant, the
tenant could find themselves without a place to live.  
Fortunately, with the passage of certain federal legislation in
2009, there is now some statutory protection for the
tenant.  In addition to the procedural protections described
above, these statutory protections now allow tenants to
continue to occupy the property, for at least a period of time,
following the foreclosure, if not for the remainder of their lease.

However, this federal legislation only applies to residential
leases and tenancies.  Commercial leases and commercial
tenants are not afforded the same statutory protections as
residential leases.  But statutory protections are not the only
protections from foreclosure that are available for parties
benefited by subordinate interests in property.  Subordinate
ownership or possessory interests in property are similarly
protected if, prior to the foreclosure proceedings, the mortgage
holder agrees to recognize such ownership or possessory
interest following a foreclosure.  Such an agreement is usually
evidenced by a separate written agreement between the
mortgage holder and the tenant with the property owner often
joining in such document.  Such agreements are often utilized
with commercial leases and provide the
commercial tenant with

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