Common Law

Rental House Foreclosed – What are Tenant's Rights?

I lease a house in Central Austin. I just learned that my landlord is going be foreclosed on by the bank that holds the note to the property. I signed a one-year lease and still have six months remaining. Am I going to be kicked out after the foreclosure or will I be allowed to remain in the house?

As recently as a few years ago, you would have been in tight spot. For years, Texas law allowed the purchaser of a foreclosed property to ask the existing tenant to vacate the property with only 30 days' notice. Texas law reflected the general rule in most states: If the mortgage was recorded before the lease was signed, the foreclosure wiped out the lease.

But in 2009, driven by the national economic recession and the increasing number of home foreclosures, Congress passed (and President Obama signed) the Protecting Tenants at Foreclosure Act, which provides protections for tenants whose landlords fall into foreclosure. Congress passed the law because legislators were concerned about tenants being displaced from one-year leases and the negative consequences that stem from that lack of stability, as well as the high number of rental properties that could be affected by foreclosure.

In short, the new federal law provides that leases can survive a foreclosure. In most cases, a tenant can now stay until the end of the lease, and month-to-month tenants are entitled to 90 days' notice before they need to move out. One exception is for foreclosure buyers who intend to live on the property, in which case the buyer may terminate the lease with 90 days' notice to the tenant, even if there is time remaining on the lease.

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Marrs, Ellis & Hodge LLP,

The material in this column is for informational purposes only. It does not constitute, nor is it a substitute for, legal advice. For advice on your specific facts and circumstances, consult a licensed attorney. You may wish to contact the Lawyer Referral Service of Central Texas, a non-profit public service of the Austin Bar Association, at 512-472-8303 or

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