Tenants and Foreclosure
Foreclosures on rental properties pose an often overlooked threat to tenants. When a landlord-owner defaults on a mortgage and isn’t able to resolve the delinquency, ownership of a tenant’s home can transfer through a foreclosure sale, leaving the tenant with a new landlord and a host of potential problems, including insufficient information to continue making rent payments, deterioration of the property, utility shutoffs, loss of security deposits, and evictions. In addition to the financial and other costs of relocation, foreclosure-related evictions can also result in negative credit reporting, hurt a renter’s ability to find new housing or place Section 8 voucher or other rental assistance at risk.
From 2009 through 2014, the federal Protecting Tenants at Foreclosure Act (PTFA) provided tenants in foreclosed properties with some basic protections against hasty eviction by new owners. Ongoing efforts to renew or revive the PTFA have not yet yielded results, so renters currently have to rely on a patchwork of state and local laws to shield them from foreclosure-related displacement. California has a relatively strong set of notice-based protections in place for tenants in foreclosed properties that will hopefully be renewed before they are scheduled to sunset the end of 2019, and several jurisdictions, including a number of California cities, have “Just Cause” ordinances that tenants have used successfully to defend against post-foreclosure evictions. Other approaches in California and around the country have included mandating advance notice to tenants of any upcoming foreclosure, requiring property maintenance by new owners, requiring utility companies to continue to provide service after a foreclosure and masking records of certain foreclosure-related evictions. Pressing Congress and state and local governments to adopt robust protections for tenants in foreclosed properties remains a priority for tenant advocates.
State Laws and Local Ordinances Protecting Tenants in Foreclosed Properties
- California State Laws Protecting Tenants in Foreclosed Properties
- California Local Ordinances Protecting Tenants in Foreclosed Properties
- Non-California State and Local Laws Protecting Tenants in Foreclosed Properties
- In 2012, the National Law Center on Homelessness & Poverty published Eviction (Without) Notice: Renters and the Foreclosure Crisis, a report that included a list of state laws enacted to protect the rights of tenants in foreclosure since the PTFA.
Practice Guides and Resources (for CA Practitioners)
Section 8 Tenants and Foreclosure – Coming Soon!
Protecting Tenants in Foreclosure Act (PTFA) Archive
External Links and Resources
- National Low Income Housing Coalition
- Tenants Together: California Statewide Organization for Renters’ Rights
- National Law Center on Homelessness and Poverty
- Fannie Mae Resources for Tenants in Foreclosed Properties
- Freddie Mac Policies for Tenants in Foreclosed Properties