Are Tenants Required to Move Out During a Foreclosure?

Written on April 26, 2016 by , updated on March 5, 2017

Tenant Rights in a ForeclosureIf the worst happens, and you lose a property to foreclosure, does that foreclosure force a tenant to move out?

What does happen when there’s a foreclosure on a property with tenants?

The number of foreclosures rose by 81% during the two worst years of the U.S. financial crisis. While things have eased, there was another spike in 2015. These statistics serve notice to landlords and tenants alike that foreclosures remain an altogether too real possibility in uncertain times.

Some History

A 2009 federal law, the Protecting Tenants at Foreclosure Act, afforded tenants the right to continue to occupy the property for at least 90 days after the property changed hands because of foreclosure. In many cases, tenants were able to stay for the full duration of their lease. That law has since expired, as of Dec. 31, 2014.


Today, tenants still enjoy an occupancy grace period in some states. In others, they can be immediately evicted.

State-by-State Provisions

According to the National Low Income Housing Coalition, states that have no legislation regarding tenants’ rights in a foreclosure include Alaska, Colorado, Indiana, Maine, New Mexico, South Carolina, South Dakota, Utah, and Virginia.

Those that allow immediate eviction include Arizona, Arkansas, Florida, Georgia, Kentucky, Mississippi, Wisconsin, and Wyoming. The remaining states allow tenants to continue to occupy foreclosed properties for various periods.

  • 3 days — Iowa, North Dakota, and Ohio.
  • 5 days — Delaware and Louisiana
  • 10 days — Alabama, Hawaii, Missouri, Montana, and North Carolina
  • 30 days — Kansas, Michigan, New Hampshire, Oklahoma, Pennsylvania, Tennessee, Texas, and West Virginia
  • 60 days — Nevada and Washington
  • 90 days — California, Connecticut, District of Columbia, Illinois, Maryland, Massachusetts, Minnesota, New Jersey, New York, and Rhode Island

Tenants in the District of Columbia, Massachusetts, New Jersey, and Rhode Island must demonstrate just cause to enjoy the full 90-day grace period. State legislatures determine what constitutes “just cause.”

Do Renters Have to Pay Rent During a Foreclosure?

Most states that favor mortgages over deeds of trust for the purchase of real property conduct judicial foreclosures, and they can lead to a drawn-out process that sometimes takes years. During this time, the landlord typically stops making payments to the mortgage company, and tenants may decide that, because of this, they can stop paying rent. This is never true. Two scenarios are possible:

1. The Mortgage Company Has a Rider

When a landlord purchases a property for rental, mortgage companies in every state typically attach a 1-4 Family Rider that gives the mortgage company the right to collect rent as soon as it has served the notice of default on the landlord (except in Michigan). The lender typically notifies tenants who must then pay rent directly to the mortgage company.

2. There Is No Rider

The landlord might have been renting out a personal residence to which no rider has been attached. In this case, tenants are bound to honor the terms of the lease agreement and continue paying rent to the landlord. Until the foreclosure proceedings result in a change of ownership, the landlord retains the right to initiate eviction proceedings for failure to pay rent.

After the Foreclosure

Tenants are still bound to honor the terms of their lease agreement even after the property changes hands. They must make rent payments to the new owner until such time as the lease expires or the owner offers a new lease or serves notice of eviction.

What About Maintenance?

Whoever owns the property retains the responsibility to keep it in habitable condition, and that can be a burden for a landlord going through foreclosure. It’s tempting to direct rent monies toward more pressing matters than a doomed rental property, but it’s wise to keep a healthy amount in a maintenance fund until the foreclosure has been finalized and the property has changed hands.

Related: How to Build an Emergency Fund for your Rental Properties


If you have questions regarding landlord and tenant rights and responsibilities, let me know in the comments!

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