Tenant Rights During Foreclosure in Tennessee

Foreclosure is not only a threat to homeowners; it is also a threat to tenants. As of publication, there were 2,591 properties in foreclosure in Tennessee. With nationwide statistics revealing that up to 38 percent of foreclosures are rental properties, tenants have cause for concern. While Tennessee law does not specifically protect tenants during the foreclosure process, federal law offers tenants some peace of mind.

Federal Law

Under the Protecting Tenants at Foreclosure Act of 2009, most tenants cannot be automatically evicted when their landlords are foreclosed on. Whether the home is sold at foreclosure auction or it is retained by the bank, the law gives tenants additional time to find a new place to live. If you have a written lease, you are allowed to stay in your home until the lease expires. If you are a month-to-month tenant, you are entitled to 90 days’ notice before your new landlord can evict you.

Owner Occupancy

The law contains one major exception. If a new owner buys your home at foreclosure auction and plans to move into the residence, you are only entitled to 90 days’ notice before being forced to vacate. This exception applies regardless of the terms of your lease.


In some situations, the bank or the new owner of the property will offer to buy you out of your lease. This is commonly known as a “cash for keys” arrangement, and it involves your new landlord offering you a lump sum of money to move out early. Since buyouts do not always benefit tenants, think carefully before entering into such an arrangement.


Most Tennessee landlords collect a security deposit from their tenants in case of damage to the property. Getting your security deposit back after foreclosure can be a challenge. You might need to take your original landlord to small claims court to collect the amount owed.

Small claims court might also be an option if the new owner moves in, forcing you to move out before the end of your lease. You may be able to sue your original landlord for the costs of finding and moving into a new rental home, as well as any increase in rent for a comparable property.


Housing laws contain exceptions and are subject to change. If you are a tenant in a foreclosure property, talk to an attorney to ascertain your rights.