Assignment of Lease

• A general assignment of rents is an agreement between a borrower and lender stating that the lender has the right to receive rent payments directly should the borrower default on the mortgage. The clause allows the lender or an assigned third party to collect rent to help sure the default. It can last through the life of a lease or until the borrower is caught up on the mortgage.
  
  Under a general assignment of rent, the delinquent borrower remains the property owner and landlord. The entity assigned to collect rent is not obligated to address landlord obligations such as repairs, maintenance and utility payments.
  
  

Short Sale

• Short sales are a widely used alternative to foreclosure. A short sale involves selling a home for less than the amount owed on the mortgage. A borrower may exercise this option if he has fallen behind on payments or is in imminent danger of defaulting due to demonstrated financial hardship. During the short sale, the tenant may be subject to home showings and other visits necessary to complete the transaction.
  
  Tenants of a short sale home are entitled to adequate notice before they can be evicted. Landlord-tenant laws, which vary by state, dictate the minimum amount of time a long-term lease holder or month-to-month tenant must receive before having to move.
  
  

Foreclosure

• The foreclosure process by which lenders legally take ownership or sell a property due to default also can affect tenants. Federal law known as the Protecting Tenants in Foreclosure Act of 2009 gives tenants enough time to move before facing eviction after a foreclosure.
  
  The full lease period of long-term lease holders must be honored by a new lender or investor owner. The lease may be terminated if the new owner intends to occupy the home as a primary residence; however, 90-days notice must be provided. Month-to-month tenants get at least 90 days to move out, regardless of who the new owner is.
  
  

Considerations

• Lenders and new owners may offer the tenant "cash for keys" to persuade them to move out sooner than required by law, according to NOLO. The tenant has the option to accept or reject the offer, and by taking the money essentially relinquishes her rights under the act and landlord-tenant laws.
  
  Borrowers who fail to pay the mortgage may also fail to comply with their obligations as landlords. Tenants who have repairs and maintenance issues that are not being adequately addressed may seek legal recourse against their landlords, according to NOLO.