Tenant's Eviction Based on Foreclosure of Property

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Author: Written by: Richard Wheelock, LAF and Revised by: Lea A. Weems, LAF and Jeremy Bergstrom, Sargent Shriver National Center on Poverty Law
Last updated: November 2013


Tenant's Rights in a Foreclosure Suit


Relevant Law

The Federal law is called Protecting Tenants at Foreclosure Act of 2009, Pub. L. No. 111-22, div, A, tit. VII, §§ 701-704, 123 Stat. 1632, 1660-62, as amended by Pub. L. No. 111-203, tit. XIV, § 1484 (PTFA). The PTFA is a floor, not a ceiling. It provides a minimum level of protection and expressly contemplates that state or local laws may provide longer time periods or other additional protections for tenants. PTFA702 (a)(2), 703(a)

The PTFA was originally set to expire on December 31, 2012, but was extended to December 31, 2014 by the Dodd-Frank Wall Street Reform Act(2010).

The most recent Illinois law,Public Act 098-0514, effective November 19, 2013, amended the Illinois Mortgage Foreclosure Law and the Forcible Entry and Detainer Act and is codified in the Illinois Code of Civil Procedure. The protections afforded to tenants under both laws are determined by:

  1. If it is a "bona fide" lease for a "residential dwelling unit", and
  2. The time at which the lease was entered or renewed.

Under both federal and Illinois law, the definition of a bona fide lease is the same:

  • The mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant
  • The lease or tenancy was the result of an arms length transaction
  • The lease or tenancy requires the receipt of rent that is not substantially less than fair market value for the property

PFTA 702(b)

However, under the Illinois law, a child, spouse or parent of the mortgagor may still have a bona fide lease if he/she can prove by a preponderance of the evidence that the lease otherwise meets the definition of a bona fide lease.

Additionally, under the PFTA, tenants residing in the property with federally subsidized housing choice vouchers (also known as Section 8 vouchers) are presumed to be bona fide tenants.

Under the Illinois law, a subsidized unit is not subject to the fair market rent test.

The PFTA applies to federally related mortgage loans, as defined in 12 U.S.C. 2602, and a mortgage loan on any dwelling or residential real property. In Illinois, the lease must be for a residential dwelling unit in foreclosure. A dwelling unit is defined under Illinois law as:

  • A room or suite of rooms
  • Providing complete independent living facilities
  • For at least 1 person
  • Including permanent provisions for cooking, eating, sleeping, and daily life activities

Residential real estate in foreclosure is defined as:

  • Any real estate, except a single tract of agricultural real estate
  • Consisting of more than 40 acres
  • That has a single family residence or residential condominium units.

For a complete overview of Illinois Housing Law, please visit Illinois Housing Law Overview.



When a mortgagee brings a foreclosure suit against the client’s landlord, the tenant has the right to notice of the proceeding and to a hearing before the client loses the right to possession. However, the rights of the tenant under any existing lease may or may not be terminated as a result of the foreclosure. Tenants are permissible, but not necessary parties to a foreclosure action. 735 ILCS 5/15-1501(b)(1). Therefore, if the tenant is not included as a party to the foreclosure (either as named party or as an “unknown owner”), the tenancy will survive the foreclosure.  735 ILCS 5/15-1501(a); Applegate Apartments Ltd. Partnership v. Commercial Laundry Systems, 657 N.E.2d 1172 (1st Dist. 1995). 

If the mortgagee tries to sue the tenant as an “unknown owner,” it must comply with 735 ILCS 5/2-413 and 735 ILCS 5/15-1501(c). This includes the filing of an affidavit and service by publication. The Court in Applegate requires a “well-directed” effort to ascertain the names of the tenants before resorting to such constructive service.

Additionally, as of November 19, 2013, tenants who are bona fide leaseholders may not be evicted by being named as a party to the foreclosure case.  A subsequent purchaser must bring a separate Forcible Entry and Detainer action.

Within 21 days of confirmation of a foreclosure sale, the purchaser of the property must make a good faith effort to obtain the identities of all occupants of the property and provide:

·         Notice to all occupants of the property that control of the property has changed hands

·         The name of the case, case number, and court where the confirming order of sale has been entered

·         The name, address, and telephone number of whom the tenant can contact with concerns about the property or to request repairs

·         Instructions on how to pay future rent

735 ILCS 5/15-1508.5(a), 735 ILCS 5/15-1508.5(b)

Additional written notice on the primary entrance to the property within 21 days of confirmation of the foreclosure sale, followed by language indicating the notice is NOT a notice to vacate the premises, and that the tenant may wish to contact a lawyer or local legal aid to discuss any rights they may have. 735 ILCS 5/15-1508.5(e) , 15-1508.5(a)(2)(iv).

These same notice requirements apply to mortgagees placed in possession of the property during the pendency of a foreclosure action, 735 ILCS 5/15-1703(a-5), and receivers, 735 ILCS 5/15-1704(f).


A purchaser, mortgagee in possession, or receiver who fails to provide the notice requirements cannot collect any rent or terminate the occupants' tenancy for non-payment of rent, until providing the required notice.  735 ILCS 5/15-1508.5(d)(i);735 ILCS 5/15-1703(a-5)(5)(j); 735 ILCS 5/15-1704(f)(5)(j). Once the purchaser has provided the required notice, the purchaser can collect rent and may terminate the occupant's tenancy for non-payment of rent. Any occupant who previously paid rent for the current rental period to the prior owner cannot be held liable for that rent by the new purchaser. 735 ILCS 5/15-1508.5(d)(ii); 735 ILCS 5/15-1703(a-5)(5)(ii); 735 ILCS 5/15-1704(f)(5)(ii).


The court records relating to any petition for possession against an occupant who holds a bona fide lease must be ordered sealed. Additionally, a supplemental petition for possession filed against a leaseholder (not bona fide) must be sealed. 735 ILCS 5/9-121(c), 735 ILCS 5/15-1701(h)(6), 735 ILCS 5/15-1224


In the City of Chicago, for properties covered by the Residential Landlord and Tenant Ordinance, within 7 days of being served a foreclosure complaint, the owner of the property must disclose, in writing, to all tenants of the property that a foreclosure action has been filed, including the court, case name, and case number. Municipal Code of Chicago, § 5-12-080.



The Federal PFTA states tenants are entitled to stay for the duration of their lease, and entitled to 90 days notice at the end of the lease period. Note: "Notice of foreclosure" was not defined in the original PTFA passed in 2009, but was defined in the Dodd-Frank Wall Street Reform Act (2010) as when title transfers to the new owner. In Illinois, that would be at confirmation of the foreclosure sale. 735 ILCS 5/15-1508, 735 ILCS 5/15-1509. The law will expire December 21, 2014. If the tenant entered into the lease after the notice of foreclosure, the PTFA requires 90 days notice on all bona fide leases.  The federal law is in effect through December 31, 2014.

Under the new Illinois law, which will remain in effect after the PTFA sunsets, if the lease is “bona fide” for “residential real estate in foreclosure” ” the time at which the lease was renewed or entered in to will determine when a lease may be terminated.  A bona fide lease may only be terminated under Article 9 FEDA

The Illinois law states that bona fide tenants who signed or renewed a lease prior to the filing of the lis pendens are entitled to remain in the residential dwelling unit for the duration of the lease and are entitled to 90 days written notice at the end of the lease. If it is a month-to-month or week-to-week lease, the tenant is entitled to 90 days written notice. 735 ILCS 5/9-207.5.


If the lease was effective after the date of filing of the lis pendens, but before the judicial sale, then the tenant is entitled to remain in the dwelling unit for the lease term up to one year, and is entitled to 90 days written notice at the end of the lease term. 735 ILCS 5/15-1224(b)


If the lease was effective any time before the date of filing the lis pendens and is an oral lease, it is deemed to be a month-to-month lease and may not be terminated without 90 days written notice. 735 ILCS 5/15-1224(c)


If the lease was effective after the date of the judicial sale, but before the date of the court order confirming the sale, the tenant is entitled to 90 days notice. 735 ILCS 5/15-1224(c)


The new Illinois law mimics the PFTA, but expires December 2014.


However, under both federal and Illinois law, if the purchaser will be using the building as his or her primary residence, the lease can be terminated early provided the tenant receives 90 days' notice. If a tenant does not have a lease, the tenant is only entitled to the 90 days' notice to vacate. 735 ILCS 5/9-207.5, PFTA §702(a)(2)(A)


If the tenant violates a lease term, the new owner must give 10 days notice.




For tenancies for one year, the landlord must provide 60 days written notice. 735 ILCS 5/9-205


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