Renting in a Foreclosed Building: Your Rights Under Federal Law
If your landlord loses the building to foreclosure, the bank or buyer that takes it over doesn't automatically get to put you out. A federal law, the Protecting Tenants at Foreclosure Act, gives most renters at least 90 days' notice. Many renters with a lease get to stay until it ends. Here's who's covered, the exceptions, what Section 8 voucher holders get, and what to do the week a foreclosure notice shows up on your door.
AT A GLANCE
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How the law came back
Congress passed the PTFA in May 2009 as part of the Helping Families Save Their Homes Act, during the foreclosure wave. It was supposed to expire at the end of 2012. The Dodd-Frank Act pushed that date to December 31, 2014, and the law lapsed then. In 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act restored it and repealed the sunset clause. According to the Federal Reserve and the OCC, the PTFA has been in effect permanently since June 23, 2018.
The Federal Reserve describes the law as "self-executing." No federal agency writes regulations to implement it or interpret it. The protections come straight from the statute, which is printed as a note to 12 U.S.C. 5220. The Section 8 provisions are in 42 U.S.C. 1437f(o)(7).
The fundamental purpose of the law is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing. (Federal Reserve, CA 18-4)
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Who's protected
The PTFA covers foreclosures on "a federally-related mortgage loan or on any dwelling or residential real property." That's broad. HUD's 2009 notice on the law said the 90-day notice applies to tenants in any foreclosed dwelling or residential real property, "regardless of the type of loan or other security interest on the property."
You get the protection only if your tenancy is bona fide. The statute sets three tests:
Test | What it means for you |
|---|---|
You aren't the borrower's family | The tenant can't be the mortgagor (the borrower) or the borrower's child, spouse or parent |
Arm's-length deal | The lease came from a normal landlord-tenant deal between unrelated parties |
Real rent | Your rent isn't substantially below fair market rent, or it's lower only because of a federal, state or local subsidy |
The subsidy clause matters. A low rent because of a voucher or another housing subsidy still counts.
Who isn't covered
The Federal Reserve lists the situations the PTFA doesn't reach:
tenants facing eviction from a property that wasn't foreclosed
tenants with a fraudulent lease
tenants who sign a lease after the foreclosure sale
homeowners who are themselves in foreclosure
The OCC also notes that the law doesn't cover personal property. Depending on state law, that can include mobile homes not on owned land and some cooperatives.
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What the new owner has to do
The duties fall on the "immediate successor in interest," usually the bank or buyer that takes title at the end of the foreclosure. The law treats the date that complete title passes to that new owner as the "notice of foreclosure" date. When that happens depends on state law.
Your situation | Your rights under the PTFA |
|---|---|
Lease signed before the notice of foreclosure | You can stay until the lease ends, and you still get a 90-day notice before any eviction |
Unit sold to a buyer who will live there | The lease can end on the date of that sale, but only after you've received a 90-day notice |
No lease, month-to-month, or a lease your state treats as "at will" | You're entitled to at least 90 days' notice to vacate |
State or local law gives more | The longer period or extra protection still applies |
The 90 days run from when you receive the notice, not when it was mailed or posted. The OCC told its examiners to check "the date that the tenant receives the notice, not the date that the notice was delivered."
Here's an example (our own illustration, not from a government source). Say you have a lease that runs through next August. The bank takes title in March and later sells to an investor who plans to keep renting the unit. You can stay through August. If instead the bank sells to a family who'll move in, your lease can end on the sale date. Even then, you must have received the 90-day notice first.
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Extra protection with a Section 8 voucher
If you use a Housing Choice Voucher, federal law protects you on top of the general PTFA rules. Under 42 U.S.C. 1437f(o)(7):
The lease and the contract carry over. The new owner takes the property subject to your lease and to the housing assistance payments contract between the old owner and the housing authority.
Foreclosure isn't "good cause." An owner can end a voucher tenancy only for serious or repeated lease violations, for breaking the law, or for other good cause. For a new owner after foreclosure, wanting the property empty before selling it doesn't count as good cause.
The narrow exception. The new owner can end the tenancy as of the date the unit transfers, but only if the new owner will live in the unit as a primary residence and has given you a notice to vacate at least 90 days before it takes effect.
Grounds in writing. Any termination must come with written notice stating the reasons.
The CFPB's advice is to contact your local housing authority and a legal aid lawyer right away. It notes that Section 8 leases usually can be ended only for good cause, so a foreclosure alone usually can't get you evicted. You may still need a lawyer to enforce that.
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What to do when you see a foreclosure notice
The CFPB's renter guidance lays out practical steps. Some of them protect you even before the sale happens.
PROTECT YOURSELF IF YOUR RENTAL IS IN FORECLOSURE
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The CFPB's renter page (last reviewed February 2024) says that after a sale you "may be required to move, often in as little as thirty days or less." That's a general statement about state procedures. For bona fide tenants, federal law sets a 90-day minimum notice. If someone gives you less, talk to a legal aid lawyer before you move.
Moving money and your deposit
Cash for keys. If the new owner wants you out, ask whether it will pay toward your moving costs. The CFPB says a bank or new owner is sometimes willing to make a "cash for keys" deal.
Your deposit. If your landlord wasn't paying the mortgage, getting back a security deposit or prepaid rent may be hard. If the landlord didn't refund it or transfer it to the new owner, you may need to take legal action.
Your belongings. When you move, take everything with you so the new owner doesn't take or throw away your things.
Other laws that can help
State and local rules. Some states and cities give renters more time or "just cause" eviction rules, which limit the reasons a landlord can end a tenancy. Under those rules, a foreclosure by itself may not be enough to evict you. The CFPB says to ask the local courthouse how long foreclosures take and how long you have after a sale.
Servicemembers. The OCC handbook points out that the Servicemembers Civil Relief Act separately limits evicting an active-duty servicemember without a court order or the servicemember's written notice of termination.
Fair housing. Once a bank owns a rental, it's a landlord, and the Fair Housing Act's anti-discrimination rules apply to how it treats tenants.
Who checks compliance
Because the law is self-executing, no federal agency issues rules under it. When the new owner is a bank, its regulator can review compliance during exams. The FDIC said its examiners will monitor and enforce compliance "in the same manner as other consumer protection laws," and the OCC and the Federal Reserve have exam procedures that check whether a bank gave the 90-day notice and honored leases. The statute applies to any immediate successor in interest, not just banks. If you think the new owner is ignoring your rights, the CFPB's advice is to get help from a lawyer or legal aid.
Related guides
Official sources
Last checked: October 30, 2026. Facts come from the PTFA text (12 U.S.C. 5220 note), 42 U.S.C. 1437f(o)(7), the CFPB's renter guidance, Federal Reserve letter CA 18-4, HUD's 2009 Federal Register notice, the OCC's PTFA handbook and FDIC FIL-56-2009. The lease example is our own illustration.
This is general information, not legal advice. Foreclosure timing and tenant rights also depend on state and local law. If you've received a notice to vacate, contact a legal aid office.
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