A foreclosure is when a bank takes back a building from an owner. This usually happens because the owner didn't make mortgage payments.

The entire legal process can last from 7 months to over a year. Sometimes, the bank and owner reach an agreement and the case ends. The owner might also sell the property to a new owner.

Your rights and duties don't change when your landlord is in foreclosure. For example:

• You and your landlord still have to follow your lease;
• You have to pay rent; and
• Your landlord, or whoever owns or is managing the property, still has to maintain the property.

You cannot be evicted just because your landlord is in foreclosure. Also, the fact that your landlord is in foreclosure is not a defense for you in eviction court.  Finally, in Chicago, your landlord must notify you within 7 days of them being sued for foreclosure. In suburban Cook County, a landlord must notify you of a foreclosure within 7 days. If the landlord fails to notify tenants, the tenant can end the lease by written notice. The tenant can also sue for $200 and legal fees.

Utilities

Your landlord cannot make you leave by shutting off your utilities, such as gas, electric, or water, or changing your locks. If anyone other than the sheriff orders you to move out, your building is boarded up, or your utilities are turned off without a court order, call 911, file a police report, and consider contacting a lawyer. Learn more about lockouts.

Repairs

During the foreclosure process, your landlord is responsible for the maintenance of your building. If the court appoints a Receiver (see below), they are responsible for maintenance. If your building is not being maintained, or your utilities such as gas, electric, or water are shut off, talk with your landlord or Receiver first. If problems still aren’t addressed, call your local department of buildings and code enforcement. The city may investigate and require the owner to make repairs.

Receivers

The judge may appoint a Receiver in the foreclosure case. A Receiver is a person chosen by the court to manage the property during the case. A Receiver is often in charge of maintaining the property and collecting rent for the property during the foreclosure case. You must be notified of these changes in writing. You can learn if the property has a Receiver from the case records which are held by your county’s circuit clerk.

Within 21 days of being appointed as a Receiver of the property, a Receiver must:

• Try to find out the names and addresses of all tenants in the building.
• Give you written notice of:
  • The foreclosure
  • The name of the Receiver to contact for repairs
  • The name and case number of the foreclosure case
  • How to pay your rent
• Post this notice on the property

Receivers cannot collect rent until they give you this notice. If they don't, you can get an eviction case thrown out of court. If no one is collecting rent, or you are unsure about who to pay, it is important that you save your rent.

Once the proper notice is given, the Receiver may be able to collect past rent owed after they took over the property. Once the proper notice is given, the Receiver may be able to evict tenants for not paying rent.

New owner

You have a right to be notified in writing if the owner of the building changes.

The foreclosure court may enter an Order of Possession with an Order Confirming Sale. This changes who owns the building. You must be notified of this in writing. You can learn if this has happened from the case records which are held by your county’s circuit clerk.

Within 21 days of taking ownership of the property, a new owner must:

• Try to find out the names and addresses of all tenants in the building.
• Give you written notice of:
  • The foreclosure;
  • The name of your new landlord;
  • Who to contact for repairs;
  • The name and case number of the foreclosure case; and
  • How to pay rent
• Post this notice on the property

New owners cannot collect rent until they give you notice. If they don't, you can get an eviction case thrown out of court.

If you are asked to move

Beware of letters and notices posted on your building saying that you must move out right away. Most renters are “qualified” or “bona fide” tenants and are entitled to at least 90 days’ notice before an eviction case can be filed against them. If you receive a notice asking you to move in less than 90 days or you are brought into the foreclosure case, you should Get Legal Help.

Just like during the foreclosure process, the new owner cannot make you leave by shutting off your utilities or changing your locks. If anyone other than a sheriff orders you to move out, your building is boarded up, or your utilities are turned off without a court order, call 911, file a police report, and consider contacting a lawyer. Learn more about lockouts

Staying in the unit after the foreclosure

If you are a renter in a building on the date the foreclosure is final, the new owner must follow the legal process to evict you.

If you have a bona fide lease, you may have more rights. You have a bona fide lease if:

• You do not own the building;
• You are not the child, spouse, or parent of the owner;
• The lease was agreed to in a fair way; 
• Your rent is not much below rent charged for other units around you; and
• You moved in before the judge confirmed the judicial sale of the property.

If you have a bona fide written lease, then you can live in the property until the lease is over. You can only be evicted after your lease is over and the new owner gives you a 90-day notice.

If you do not have a written lease, but you have a verbal agreement, you probably have a month-to-month lease. In that case, you have to be given a 30-day notice to be evicted. 

If you are a bona fide renter, and the property was transferred to a new owner in the foreclosure, then you have to be given a 90-day notice. However, you may not have 90 days if:

• You were named in the foreclosure lawsuit from the beginning and you do not have a bona fide lease. You may have been served in the foreclosure case and your name may be included on the Eviction Order; or
• You do not have a bona fide lease, and the new owner filed a Supplemental Petition for Possession in the foreclosure case against you. The petition must be filed within 90 days of the final order confirming the sale. In that case, you may have up to 120 days from the date of the filing until you must leave.

Note: If you rent a property from a person who no longer owns the building, you do not have a valid lease. You do not get any of the protections for renters in foreclosure. You may have been a victim of fraud. If so, you should consider reporting it as a crime. Still, to evict you, the actual owner must give you notice and go to court to file an eviction case. The Sheriff is the only person who can physically evict you.

Getting your [no-lexicon]security deposit[/no-lexicon] back 

If your building went through foreclosure, you can get your security deposit back from your old landlord if they did not give it to the new owner.

If you live in a building with 5 or more units, the judge must order the old owner to give the security deposits to the new owner. You can go to court to ask the judge to do this.

If the property is less than 5 units, then that new owner may not be responsible for the security deposit after foreclosure. But if the deposit is transferred to the new owner, you must be notified.

Learn more about Getting your security deposit back.