If you're a renter in Illinois caught in the crossfire of a foreclosure, a state law can help you stay in the home through the end of your lease or, if you have a month-to-month or week-to-week agreement, provide you with some much needed extra time to find another place to live.
Read on to find out how Illinois law protects renters who are often innocent victims when their landlord goes through a foreclosure.
Foreclosures in Illinois are judicial, which means the lender must foreclose through the state court system. The lender initiates the foreclosure by filing a complaint and having it served on the borrower, along with a summons to appear in court. The lender also records a lis pendens in the county records. (Learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, in Will Your Foreclosure Take Place In or Out of Court?)
On August 21, 2013, Illinois Governor Pat Quinn signed Senate Bill 56, which was codified at 735 Ill. Comp. Stat. § 5/9-207.5, a law protecting Illinois renters in foreclosed properties. The law requires anyone who acquires residential property through a foreclosure to honor their tenants’ existing leases or provide sufficient notice so the renters can find new housing.
Specifically, the law states that, in the case of a foreclosure, the landlord may terminate a bona fide lease only:
A bona fide lease means a residential lease in which all of the following are true.
Federal law also protects tenants after a foreclosure. On May 20, 2009, President Obama signed into law the Protecting Tenants at Foreclosure Act. Under this Act, like under Illinois law, tenants are generally permitted to stay until the end of the lease, and tenants without a lease (or a lease terminable at will) are entitled to 90 days' notice before having to leave the property. Though if the buyer at the foreclosure sale intends to occupy the property, a lease can be terminated with 90 days' notice. (To learn more about tenant’s rights in foreclosure, read Protections for Tenants After a Landlord's Foreclosure.)
The Protecting Tenants in Foreclosure Act of 2009 previously expired on December 31, 2014. But, on May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155). This law repealed the PTFA’s sunset date. So, the PTFA is back in effect permanently as of June 23, 2018 (30 days after the enactment of S. 2155).
If you’re renting a home that’s going through foreclosure in Illinois—or has already been foreclosed—and need help enforcing your rights, consider talking to an attorney.