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Your federal rights (PTFA)
The Protecting Tenants at Foreclosure Act, made permanent in 2018, applies to foreclosures of residential properties. The immediate successor in interest (often the bank or buyer at the sale) takes the property subject to the rights of bona fide tenants:
- Tenants with a lease can stay until the end of the lease term.
- Month-to-month tenants (or those without a lease) must receive at least 90 days’ written notice to vacate.
- Exception: if the new owner will occupy the unit as a primary residence, it can end the lease with 90 days’ notice, even if the lease has more time left.
States can provide more protection, and many do—for example, requiring just cause for eviction after foreclosure.
Section 8 tenants
If you have a Housing Choice Voucher, the new owner generally takes the property subject to both the lease and the HAP contract with the housing agency, and must honor them except in limited circumstances (such as when the new owner will occupy the unit, which still requires 90 days’ notice). Contact your housing agency immediately if you learn of a foreclosure.
What to do
- Watch for notices of the foreclosure sale and the new owner’s identity.
- Keep paying rent and keep receipts.
- Send your lease to the new owner or servicer once identified, with a written statement of your rights.
- Don’t leave early based on a verbal demand; you’re entitled to written notice.
- Contact legal aid if you receive an eviction notice or court papers.
- Ask about repairs and utilities—the new owner is responsible for maintaining the property.
Cash for keys
New owners sometimes offer money if you move out quickly. It’s voluntary. Consider whether the amount covers moving costs, a new deposit, and the value of the time you’re giving up. Get the agreement in writing, including the move-out date, payment amount, deposit return, and a promise not to report an eviction.
Warning signs your building may be in foreclosure
- Notices posted on the door or property about a sale or auction
- Letters addressed to the owner from lenders or law firms
- The landlord stops making repairs or collecting rent
- Utility shutoff notices for building-paid utilities
- People inspecting or photographing the property
You can search county court or recorder records for foreclosure filings on the property.
Utilities during foreclosure
If the owner stops paying building utilities, many states require utilities to notify tenants and allow them to keep service by paying directly. Contact the utility and code enforcement if service is threatened.
If the landlord stops collecting rent
Set aside the rent each month in a separate account so you can pay whoever is legally entitled to it once ownership is clear. Don’t spend it—new owners or courts may require you to pay.
Tenants in HUD-owned or government-sponsored foreclosures
Fannie Mae, Freddie Mac, and HUD have had policies allowing tenants to remain in foreclosed properties they acquire in some situations, sometimes with new leases at market rents. Ask the new owner or its property manager about options.
State and local protections
Some states and cities give renters stronger rights after foreclosure, such as just-cause eviction requirements or longer notice periods. Legal aid can tell you what applies.
Frequently asked questions
Who is a bona fide tenant?
Generally a tenant who isn’t the former owner or the owner’s spouse, child, or parent; whose lease was an arm’s-length transaction; and whose rent isn’t substantially below fair market rent (unless it’s subsidized).
Who do I pay rent to during a foreclosure?
Keep paying your landlord until the foreclosure sale, unless a court or new owner properly notifies you otherwise. After the sale, the new owner generally becomes your landlord. Get written proof of who owns the property before paying someone new.
What about my security deposit?
State law controls. In many states the new owner becomes responsible for deposits; in others, you may need to pursue the former landlord. Keep your receipt and lease.
Should I accept cash for keys?
Maybe. It’s voluntary. Compare the offer against your right to stay for the lease term or 90 days, moving costs, and the deposit. Get the agreement in writing and ask legal aid if unsure.
Sources and verification
Use these sources to check program rules. Funding, openings, and local procedures must be confirmed with the agency handling your application.
- Economic Growth, Regulatory Relief, and Consumer Protection Act, Sec. 304 (restoring the Protecting Tenants at Foreclosure Act)Congress.gov
- 12 U.S.C. § 5220 note — Protecting Tenants at ForeclosureLegal Information Institute, Cornell Law School
- Tenant rightsUSAGov
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