Tenant Protections When a Landlord Faces Foreclosure

Question

What are tenant rights during foreclosure?

Answer

Facing a landlord’s foreclosure can leave renters anxious about eviction and lost deposits. Fortunately, federal and state laws offer specific rights and timelines to help tenants stay in their homes or transition smoothly.

Under the federal Protecting Tenants at Foreclosure Act (PTFA), new owners must honor existing bona fide leases. Key points include:

Fixed‑Term Leases: If your lease has a definite end date (e.g., one year), the purchaser must let you remain until the lease expires.
Month‑to‑Month Tenancies: For periodic rentals, the new owner may terminate with at least 90 days’ written notice.
Non‑Federal Property: PTFA covers most foreclosures, but check local rules if your building isn’t federally backed.

Whether you hold a lease or rent month‑to‑month, the following protections also apply:

Notice Requirements: You must receive a clear eviction notice before any lock‑out or removal.
Security Deposits: The foreclosing party or new owner must transfer your deposit, in compliance with state security deposit laws.
Rent Payments: Continue paying rent to the party specified in writing; withholding rent can jeopardize your rights.
Eviction for Cause: New owners cannot evict you without proper cause or bypass judicial eviction procedures.

States may offer additional safeguards—for example, California extends 90‑day notices to all tenants, while New York requires relocation assistance. Always verify your state or local housing authority’s rules for extra support.

Before responding to any foreclosure notice, document all communications, retain copies of your lease, and keep records of rent payments. Tenants are recommended to verify specific dates and notice requirements under PTFA and local statutes. For more details on federal foreclosure protections, visit the HUD Foreclosure Resources.

While these rules aim to protect renters, it’s advisable to consult a licensed attorney or local housing counselor to navigate your unique situation and rights under state law.