Abandonment

What is Abandonment in Real Estate?

A property has been abandoned when the rightful lessee (tenant) or property owner surrenders ownership or possession of the subject property without a formal successor. How an abandoned property is handled depends on whether it was abandoned by a tenant or the actual owner.

With leasehold properties, a tenant abandons the property when they move out without informing the property owner or manager.

Similarly, property owners commit abandonment when they walk away from the property without transferring or conveying the property’s title or possession to another party. This becomes a typical occurrence with mortgage defaults and foreclosure, when property owners decide not to fight the foreclosure.

When a tenant abandons a leasehold (rental) property AND stops paying the rent, the landlord must follow applicable local laws when trying to reclaim rental units abandoned by the tenant. The landlord may be required to go through a formal lease termination process and even hang on to any of the personal properties left behind for a period of time.

When a property owner abandons a fee simple property — such as during a foreclosure — the mortgagee (lender) or other property claimant must follow the terms of the mortgage and applicable state laws to formally claim the property.

For example, if the borrower abandons a property during a foreclosure without formally handing over the property to the lender, the lender must still complete the foreclosure process in order to take full ownership and control of the subject property.

When an area experiences a severe economic downturn, a wave of property abandonment often follows. Municipalities will often claim abandoned property for the purpose of recycling it back into the market at a later date. When a local government acquires abandoned property, it doesn’t have to be a “taking” with their eminent domain powers. In most cases, the local government obtains title to those property through a tax foreclosure.

For more information, see also the following entries:

  • :D efault:
  • :Eminent Domain:
  • :Eviction:
  • :Fee Simple:
  • :Foreclosure:
  • :Landlord:
  • :Lease:
  • :Leasehold:
  • :Mortgage:
  • :Mortgagee:
  • :P ersonal Property:
  • :Real Estate Taxes:
  • :Taking:
  • :Tax Sale:
  • :Tenant:


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