If you’ve paid your rent on time, haven’t disturbed the neighbors and have kept the property in good shape, you usually assume you’ll have a place to live until your lease term ends. But If your landlord fails to make mortgage payments and his lender forecloses on your rental home, your tenant-landlord relationship changes dramatically, and the bank may attempt to force you to move. Tenants often maintain rights during a foreclosure, however.
Protecting Tenants at Foreclosure Act
The Protecting Tenants at Foreclosure Act of 2009 provides renters with many more protections against eviction if their rental is foreclosed upon. In many cases, renters who met the terms of their lease and pay their rent on time are entitled to live in the property through the end date of their lease as long as the lease was signed before the foreclosure. Even if the bank that owns the foreclosed property may evict tenants, renters must receive a 90-day eviction notice before the law requires them to move out.
Exceptions to Tenants' Rights
Even tenants in good standing with their landlords may be forced to move out of a foreclosed rental. The Protecting Tenants at Foreclosure Act allows the bank to evict tenants who hold a month-to-month lease, tenants without a lease or tenants with a lease that’s determined to be terminable at will by state laws. Additionally, if the bank sells the property and the new owner plans to use it as her primary residence rather than as a rental property, the tenant may be evicted. Even in these cases, federal law requires tenants receive a 90-day notice before they’re forced to move.
Landlord in Bankruptcy
If your landlord files for bankruptcy, the foreclosure process is paused during bankruptcy proceedings. In some cases, depending upon his debts and assets, the landlord may move to restructure his debt on his rental property and hold onto the property. If this happens, your lease continues with your original landlord. If the foreclosure proceedings continue, you hold the rights provided by the Protecting Tenants at Foreclosure Act. How long you may continue to remain in your rental home depends upon how far the foreclosure proceedings were before bankruptcy stalled it.
In addition to rights granted by the Protecting Tenants at Foreclosure Act, your state might have additional laws that extend your rights as a tenant during foreclosure. Tenants must receive advance notice of foreclosure of their rental in 22 states: Alaska, California, Colorado, Delaware, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, Montana, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Vermont, Washington and West Virginia. Most of these states require the landlord to inform the tenant. In some states, tenants must be named as parties in a foreclosure proceeding, which provides notice from the court that the bank is foreclosing on the home.
- CNN Money: Your Landlord Got Foreclosed. Do You Have to Go?
- FDIC: Protecting Tenants at Foreclosure Act
- Bankrate.com: When Your Landlord Goes into Foreclosure
- National Law Center on Homeless and Poverty: A 50-State Review of the (Lack of) Rights of Tenants in Foreclosure
- Nolo. "Tenant Rights to a Livable Place." Accessed March 24, 2020.
- Justia. "Major Repairs and Maintenance." Accessed March 24, 2020.
- Washington Law Help. "I am a Tenant Living in a Foreclosed Property. What are My Rights?" Accessed March 24, 2020.
- U.S. Department of Housing and Urban Development. "FHA Single Family Housing Policy Handbook - Glossary," Page 5. Accessed March 24, 2020.
- Bornstein Law. "A glance at owner move-in evictions in 2018." Accessed March 24, 2020.
- Wisconsin Department of Agriculture, Trade and Consumer Protection. "Student or Not, You Have Rights as a Tenant." Accessed March 24, 2020.
Wilhelm Schnotz has worked as a freelance writer since 1998, covering arts and entertainment, culture and financial stories for a variety of consumer publications. His work has appeared in dozens of print titles, including "TV Guide" and "The Dallas Observer." Schnotz holds a Bachelor of Arts in journalism from Colorado State University.