A new federal law (click here for law) passed by Congress and signed 5/20/2009, provides protections for tenants whose landlords fall into foreclosure. Under the Helping Families Save Their Homes Act (entire 72 document-see Title VII), tenants have the right to stay in their homes after foreclosure for 90 days or through the term of their lease. The bill also provides similar protections to housing voucher holders. The protections go into effect immediately and expire at the end of 2012.

In California, for instance, at least one third of the units going through foreclosure in California are rentals. Under current law, most California tenants are entitled to 60-days notice of eviction after foreclosure. The new federal law increases this to 90 days.

California law provided that leases were to be terminated by foreclosure, with limited exceptions. Now, with the new federal law, leases survive foreclosure, except that the lease can be prematurely terminated and the tenant given 90-day notice where a purchaser seeks to occupy the premises.

Some cities have local laws prohibiting foreclosure evictions. The new federal protections do not override these laws which remain in full force.