What happens when your landlord is in foreclosure?

If your landlord misses a mortgage payment, the bank can file a court case against them. Tenants also get a notice that a foreclosure case has begun, with a copy of the foreclosure Summons and Complaint. This does not mean that you have to move out. It only explains what is happening so you can plan for the future. If your owner can't settle with the bank or prove their case, then a foreclosure sale is likely. This means that the property will be sold at an auction.

At the auction, someone might buy the property. Then you will get a notice about what happened, who the new landlord is, and your rights as a tenant.

You are not affected by a foreclosure sale. BUT if you are in a rent-controlled or rent-stabilized unit, the new owner can evict you if they want to live in your place. The new owner still has to give you a 90 day notice.

You should receive a copy of the foreclosure Summons and Complaint. These legal documents will have “Supreme Court of the State of New York” at the top of the page.

The documents may have your name, your landlord’s name, or use made-up names for tenants like “John Doe” or “Jane Doe.” If your name is on these legal documents, that does not mean you have to go to court. 

You will also get a notice that a foreclosure action has begun. This notice will have the contact information of the bank or lender that is bringing the foreclosure case against your landlord and  a brief description of your rights. The notice must be posted at your building's entrances and exits. These notices must be easy to see, on colored paper in large, bold font. If your building has less than five units, the notice should be delivered by regular mail. 

Note: if you moved into the property more than 10 days after the foreclosure case started, then the landlord probably doesn't have to give you notice. 

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.

Foreclosure cases can take a year or more before the property is sold. Meanwhile, your landlord can still collect rent, unless the court appoints a receiver to collect it. The landlord must also keep the property in livable condition for you. They must keep up with maintenance and repairs.

The landlord may start the eviction process, but they cannot remove you from the property without a court case and eviction order.

The court can appoint a receiver to collect rent and manage the property during the foreclosure. This is more common in a larger, multifamily building. Tenants should get a notice to pay their rent to the receiver instead of the landlord. Note: never pay your rent to anyone other than your landlord without written proof (like a court order).

The receiver must keep the property in livable condition. If there are problems with the property, the receiver has the same responsibility as a landlord to provide services and make repairs.

If a receiver is appointed by the court, they must keep the property in livable condition by making repairs and providing services.

If no receiver is appointed, the landlord must keep the property in livable condition.

Sometimes, a foreclosure sale will not impact you. For example, if the landlord kept the property because the bank could not prove its case or because they settled, you can stay. Even if there is a new landlord after the foreclosure sale, they might want to keep you as a tenant.

If the landlord wants you to move out, they have to follow the rules. They must give you a 90 day notice to move out, even if you do not have a written lease. You have the right to stay until the end of your lease term, which might be longer than 90 days. If you do not move out by the end of your lease, then they can start a case in court to evict you. 

If you live in Section 8 housing, a rent-controlled unit, or a rent-stabilized unit, you have more protections against eviction. The landlord cannot evict you just because of the foreclosure sale:

• To evict you from Section 8 housing, they need to show that you repeatedly violated the terms and conditions of your lease.
• To evict you from rent-controlled and rent-stabilized units, they must intend to make the property their own home and give you a 90 day notice.

If you don't leave, the new owner can try to evict you. They must file papers in court to begin an eviction proceeding against you. If a judge signs a warrant of eviction, then you are ordered evicted. An official such as a sheriff or marshal must serve (give or deliver) you the warrant. The new owner cannot use force, threats, or other illegal ways to make you leave.

No. The court seals (closes) records about tenants who are evicted after a foreclosure sale. The court cannot tell anyone that you were evicted. Your identity will be protected. A foreclosure on your landlord does not affect your credit rating or ability to find new housing.