Your Rights When Your Rental Property Is Sold or Foreclosed

A sale does not end your lease unless the lease itself says it ends on a sale, and even then a just-cause eviction law may protect you. The buyer becomes your landlord, must honor a fixed-term lease on its current terms until it expires, and takes over your security deposit unless the seller returns it to you. Foreclosure works differently, but federal law still sets minimum protections: the new owner must give you at least 90 days' written notice to leave, and it must let you finish a lease signed before the foreclosure unless the unit is sold to a buyer who will live there.

What happens to your lease when the building is sold

A fixed-term lease, such as a one-year lease, stays in force on the same terms through its end date; California's tenant guide states this rule for voluntary sales. New York's attorney general adds that a lease cannot be changed while it is in effect unless both sides agree. In practice, the new owner cannot raise your rent or add fees mid-lease unless your lease already allows it.

The exception is a lease clause covering a sale. The Texas State Law Library notes that a new owner is bound by the existing lease unless it specifically says it will end if the property is sold; if yours has that clause, you may have to move or negotiate a new lease. A just-cause eviction law can still limit that clause. In California, once the Tenant Protection Act covers your tenancy (generally after 12 months), any notice ending it must state a just cause, a reason the law accepts.

A month-to-month tenancy is less secure. The new owner can end it or change its terms by giving the written notice your state requires, and local rent rules may limit both. The same California just-cause rule applies to month-to-month tenancies it covers. See month-to-month vs. fixed-term leases.

The same split applies to your deposit amount in California. A new owner cannot raise the security deposit during a fixed-term lease unless the lease allows it. On a month-to-month tenancy, it can raise the deposit only after proper written notice, if local law permits, and only up to the state limit.

What happens to your security deposit

When a building sells, the seller either hands your deposit to the buyer or returns it to you, and state law decides who owes it when neither happens:

In California, a new owner cannot charge current tenants a fresh deposit just to make up for deposits it failed to collect from the seller. For more on deposits in a sale, see what happens to your deposit if your landlord sells.

Showings while the property is for sale

Your landlord can show your unit to buyers, but only with the notice your state requires. In California, showing the unit to a purchaser is an allowed reason for entry, with the usual written notice (24 hours is presumed reasonable) during normal business hours. The landlord may instead give notice by phone or in person, but only if, within the past 120 days, it told you in writing that the unit is for sale and that it may contact you orally to arrange showings. After an entry on oral notice, the person who entered must leave written evidence, such as a business card.

New York allows entry with reasonable prior notice, at a reasonable time, and with the tenant's consent, for repairs, services, or reasons the lease allows. If a tenant refuses consent without a good reason, the landlord can ask a court to order entry. For the general entry rules, see your privacy rights and landlord entry.

If the building goes into foreclosure

Until ownership (title) transfers at the foreclosure sale, your landlord still owns the building and your lease is unchanged, so keep paying rent as your lease requires. Falling behind can cost you time later: in New York, the new owner after a foreclosure can evict before your protected period ends if you do not pay rent due under your lease.

After the sale, the federal Protecting Tenants at Foreclosure Act applies. It lapsed at the end of 2014, and Congress restored it with no expiration date effective June 23, 2018. The new owner must:

1. Give at least 90 days' written notice before you have to leave, whether you have a lease, rent month to month, or have no written lease.
2. Honor your lease until it ends, if you signed it before title transferred. The one exception: the owner can end the lease with 90 days' notice if it sells the unit to a buyer who will live there as a primary residence.
3. Continue a Section 8 voucher tenancy under your lease and the housing assistance contract, unless the new owner will live in the unit, in which case it must still give 90 days' notice.

These protections apply only to bona fide tenancies. You cannot be the borrower or the borrower's child, spouse, or parent; the lease must be an arm's-length deal, meaning an ordinary agreement between independent parties; and the rent cannot be far below market unless a government subsidy reduces it. The law does not cover a lease signed after the foreclosure sale.

Federal law is a minimum, and some states add more:

• California: 90 days' written notice for month-to-month tenants, and a fixed-term lease signed before the sale is honored with exceptions that track the federal ones.
• New York: you can stay for the greater of 90 days from the notice or the rest of your lease, and the new owner must tell you its name and address in writing. An owner who will live in one unit can limit that one tenant to 90 days, unless the unit is in a federal or state subsidy program such as Section 8.
• Massachusetts: if the foreclosing lender, Fannie Mae or Freddie Mac, or another bank-type lender that takes title within 3 years of the foreclosure owns the building, it cannot evict you without just cause, such as unpaid rent after written notice of the amount or a lease violation you do not fix within 30 days of notice. That limit ends once it signs a binding agreement to sell to an independent buyer.

Deposit rules can also change in foreclosure. In Texas, the rule that makes a new owner liable for your deposit does not apply to a mortgage lender that takes title by foreclosure, so your claim stays with the former landlord.

Offers to move out early

After a sale or foreclosure, a new owner may offer money if you leave before your lease or notice period ends. That is a cash-for-keys deal, and you do not have to take it. Compare the offer with what you would give up, such as the months left on your lease or your 90 days, plus moving costs, and get any agreement in writing before you move. See cash-for-keys agreements.

Steps to take when you hear about a sale or foreclosure

1. Find your lease, your deposit receipt, and any move-in checklist, and keep copies.
2. Read your lease for any clause about a sale or early termination.
3. Ask the current landlord in writing for the new owner's name, address, and payment instructions, and keep paying rent on time with proof of each payment.
4. Ask in writing what happened to your deposit, and confirm the amount with the new owner.
5. If you get a notice to vacate after a foreclosure, compare its date with the 90-day minimum and your lease end date, and contact a local legal aid office before you move.

For the protections that apply to every renter, see what are your basic rights as a tenant.