What to know when your landlord is in foreclosure
Authored By: Legal Services of the Hudson Valley
- Read this in:
- Spanish / Español
Is your landlord being foreclosed on or has already lost the property?
The Protecting Tenants at Foreclosure Act (PTFA) provides tenants with the right to stay in their rental properties even though their landlords have lost the rental property to a purchaser after the foreclosure process has ended.
No one should move just because they see that their landlord has foreclosure papers, many tenants can stay in their homes despite the foreclosure.
A tenant does not have to move until a judge orders an eviction.
What happens when there is a foreclosure on my landlord’s property, which is where I live? +
If your landlord misses his mortgage payment, the bank will file a case in Supreme Court. If the landlord is unable to work out a settlement with the lender, then the bank will get a judgment of foreclosure, and may auction off the property. Sometimes the bank will buy the property or the property may be sold to a new owner.
How will I know if my landlord is facing foreclosure? Do I have to ask? +
No, you do not have to ask. You may receive papers with “Supreme Court of the State of New York” at the top sent to your home.
They can be posted in any common areas (such as a hallway or front door) of the building where you live.
These papers may have your name on them. Sometimes they just have your landlord’s name, or they may list tenants by made-up names like John Doe or Jane Doe. If you suspect that your landlord is in foreclosure, or has lost the property to a new owner, check with the clerk’s office in the Supreme Court in your county or borough.
What happens while the foreclosure case is ongoing? +
Keep in mind that foreclosure cases can take 6 months or more before the property is sold. During this time, your landlord can collect rent, sign leases, and begin eviction proceedings, unless the court has appointed someone called a receiver.
What is a receiver? +
The receiver is a person appointed by the court to manage the building or complex until it is sold at auction. The receiver sends the tenants a notice telling them to begin paying rent to the receiver, not to the landlord. You should never pay your rent to anyone other than the landlord, without written proof that you are required to do so.
What about service and repairs while the foreclosure process is ongoing? +
If a receiver has been appointed, they must make repairs and offer services. If no receiver has been appointed, the owner remains in charge of offering the services agreed upon by the landlord and the tenant until the building is sold.
If the property is sold at foreclosure, do I have to still pay rent to my landlord? +
No. After the property has been sold, the landlord-tenant agreement is terminated.
If the property is sold at foreclosure, do I have to pay my rent to the new owner? +
No, not necessarily. Remember, ownership does not create a landlord-tenant agreement between you and the new owner.
After the place where I live has been sold at foreclosure, do I have to move? +
No. The PTFA provides tenants with the right to receive 90 days written notice of eviction following the foreclosure.
Tenants with a rental subsidy cannot be evicted until their lease expires, unless the new owner is going to live there. The PTFA also requires the new owner to allow tenants who have leases to continue residing in the property until their lease term has expired unless the new owner intends to live in the property as their home. Then the existing lease can be stopped with 90 days written notice.
If you do not have an ongoing lease for a term of six months, one year, etc.; you are still entitled to receive a 90 day written notice.
Whether or not I have a lease, do I have to get out when the lease or the 90 days written notice has expired? +
No. The new owner must begin an eviction proceeding against you; you can only be lawfully evicted after a judge has signed a warrant of eviction that has been served by an official of the court.
Does the new owner have to offer repairs and services? +
Yes. Under RPAPL Section 1307, a plaintiff (other than an official entity holding a subordinate mortgage) having obtained a judgment of foreclosure involving residential real property (as defined in RPAPL Section 1305) which is vacant, becomes vacant after issuance of the judgment of foreclosure, or is left empty by the mortgagor but occupied by a tenant (also as defined in RPAPL Section 1305), shall keep up the property until a deed transferring the ownership of the property is recorded. The landlord is not in charge of keeping up the property if a receiver is serving or, if the landlord starts bankruptcy proceedings, while the bankruptcy stay is in effect.