Landlord & Tenant Law
What happens if a residential landlord is foreclosed upon?
Under federal law, a tenant with a valid lease can continue to live in the property for the term of the lease. Foreclosure does not change the status of the lease. A tenant at will, or a tenant whose lease has expired, can be made to vacate the property following foreclosure, as long as the lender, or purchaser at auction, gives the tenant a 90 day written notice to vacate the property.
Under state law, within 30 days of the foreclosure, the new owner must give tenants a notice with the name, address, and telephone of the person in charge of the building; the place where a tenant should send the rent; and a statement informing each tenant that the tenant has the right to a court hearing before eviction. The new owner must give a tenant at least 30 days notice to quit. However, if the new owner is a bank, mortgage company, or similar financial institution, a tenant can only be evicted for "just cause" or if the new owner has signed a binding purchase and sale agreement with a third party.