Illinois Renters Caught in Foreclosure: What Are Your Rights?

An Illinois law allows a tenant whose landlord has lost the rental house through foreclosure to stay in the home longer.

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.

How Foreclosure Works in Illinois

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?)

Illinois Law Protects Renters When the Landlord Goes Through Foreclosure

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:

  • at the end of the term of the bona fide lease, by no less than 90 days' written notice (though if the buyer at the foreclosure sale intends to occupy the property as a primary residence, the lease can be terminated with 90 days' notice) or
  • in the case of a bona fide lease that is for a month-to-month or week-to-week term, by no less than 90 days' written notice.

What's a "Bona Fide" Lease?

A bona fide lease means a residential lease in which all of the following are true.

  • The mortgagor (borrower) or the child, spouse, or parent of the mortgagor is not the tenant. (Though a child, spouse, or parent of the mortgagor may prove by a preponderance of evidence that a written or oral lease is a bona fide lease.)
  • The lease was the result of an arms-length transaction.
  • The rent in the lease is not substantially less than fair market rent for the property or the rent is reduced or subsidized pursuant to a federal, state, or local subsidy.
  • Either the lease was entered into or renewed (1) on or before the date of the filing of the lis pendens or (2) after the date of the filing of the lis pendens and before the date of the judicial sale of the residential real estate in foreclosure, and the term of the lease is for one year or less.

Protecting Tenants at Foreclosure Act of 2009

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).

Getting Help

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.

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