Buying foreclosed Virginia homes that are currently occupied: rules and procedures

If you're planning on buying foreclosed Virginia homes occupied by tenants, you have to tread carefully to make sure that everything is handled fairly for both you and the tenants. Foreclosure is a contentious process in itself, so a foreclosure where there are tenants living in the property once a sale goes through can be even more difficult for everyone involved. If you are aware of the rights of the tenants as well as your own rights, things should move smoothly for everyone.

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While most states allow for a redemption period once a house is sold at foreclosure, Virginia does not. A redemption period is the period after a house has been sold through foreclosure where the original homebuyer can pay all of the money due to the lender and get the house back. While a lender can voluntarily offer the original homebuyer this option, Virginia law does not require it. This used to mean that once you purchased your occupied foreclosed Virginia home, for all intents and purposes, it was yours.

This process served to create undue hardship for existing tenants. Things were changed with the Protecting Tenants at Foreclosure Act of 2009. The act was instituted by President Obama to protect the rights of tenants who lived in homes that had been foreclosed. The law gives tenants the following protections:

• When you buy a foreclosed home, you must give tenants three months notice prior to eviction.
• You must allow the existing tenant to stay in the home through to the end of the lease unless you are planning to make it your primary residence or there is no active lease in place. Even if this is the case, you will still need to give the tenants three months notice before the eviction.
• The law only applies to bona fide tenants who are not the child, parent or spouse of the outgoing homeowner. The property cannot be rented with any type of state, federal or local subsidy.

In some cases, you may want to offer cash to existing tenants so they will move out. This cash amount should at least cover expenses related to moving and getting a new apartment. In cases where you'd like to move in faster, you may want to consider this option. Just make sure you get a lawyer and put everything in writing so that there are no misunderstandings about the move-out date.

Virginia also has squatters' rights laws, which say that a person who has lived in a property for 15 years has rights to the property title. Although this situation is rare, tenants may claim to have lived in the property for that time. You will need a lawyer to settle squatter’s rights disputes.

To browse foreclosed properties in your area, go to Reply! Real estate listings typically do not indicate if the property is occupied, so research homes before you buy.