What Happens if the Home You’re Renting Is Foreclosed On?

If your rental home goes into foreclosure, you have rights. The Protecting Tenants at Foreclosure Act (PTFA) gives you at least 90 days’ notice before you have to move, and in some cases, you can stay until your lease ends. Keep paying your rent, know your rights, and communicate with your landlord and the new owner.

It’s a renter’s worst nightmare: you come home to find a foreclosure notice on your door. The home you’ve been renting is being sold out from under you, and you’re caught in the middle. What happens now? Do you have to pack up and leave immediately?

The good news is, you have rights. Both federal and Colorado state laws offer protections for tenants in this situation. This guide will walk you through what to expect, what your rights are, and what steps you can take to protect yourself and your housing.

What Are a Renter’s Rights in a Foreclosure?

The most important law on your side is the Protecting Tenants at Foreclosure Act (PTFA). This federal law ensures that you won’t be immediately kicked to the curb. Here’s what it guarantees:

• 90-Day Notice: In most cases, the new owner must give you at least 90 days’ written notice to vacate the property.
• Honoring Your Lease: If you have a lease, the new owner must typically honor it until the end of the term. The 90-day notice applies if the new owner intends to live in the property as their primary residence.
• Month-to-Month Tenancy: If you’re on a month-to-month lease, you are still entitled to the 90-day notice.

It’s important to note that these protections apply as long as you have a valid lease and are paying your rent.

What Should I Do if My Rental Goes into Foreclosure?

Finding out your rental home is in foreclosure can be stressful, but taking proactive steps can make a big difference. Here’s what you should do:

1. Stay Calm and Informed: Foreclosure is a lengthy legal process. A notice on the door doesn’t mean you have to be out by tomorrow.
2. Keep Paying Your Rent: Continue to pay your rent to your original landlord until you are officially notified of a change in ownership. If your landlord refuses to accept rent, set the money aside. Not paying rent can be grounds for eviction, which could weaken your position.
3. Communicate: Talk to your landlord to understand the situation. Once the property is sold, the new owner should contact you. Get everything in writing, including any notices to vacate or new lease agreements.
4. Know Who the New Owner Is: After the foreclosure sale, find out who the new owner is. This could be the bank or an individual investor. You will need to pay rent to the new owner, so make sure you have their contact information.
5. Understand Your Lease: Review your lease agreement. The terms of your lease are important, especially if you want to stay until the end of the lease term.
6. Seek Legal Advice: If you’re unsure about your rights or if the new owner is trying to evict you unfairly, contact a landlord-tenant lawyer or a housing advocacy group. Organizations like Colorado Legal Services offer free legal assistance to those who qualify.

What’s the Foreclosure Situation in Denver?

While foreclosure rates are not at the crisis levels seen during the 2008 housing crash, they have been on the rise. According to ATTOM Data Solutions, Colorado saw a 41% increase in foreclosure activity in the first half of 2025 compared to the same period last year. In Denver, eviction filings have also been on an upward trend, with 2023 and 2024 setting new records.

This data suggests that more renters may find themselves in this situation. Being aware of the local market trends can help you understand the context of your situation and the importance of knowing your rights.

Can the New Owner Pay Me to Move Out?

Yes, this is often called a “cash for keys” agreement. The new owner might offer you money to move out by a certain date. This can be a good option if you’re able to find a new place quickly, as it can help cover moving costs and a new security deposit. If you’re offered a cash for keys deal, make sure to get the agreement in writing before you move out.

What About My Security Deposit?

Getting your security deposit back can be tricky. Your original landlord is responsible for returning your deposit. However, if they are in financial trouble, they may not have the funds. If the new owner did not receive the security deposit from the old landlord, they are generally not responsible for it. You may have to sue your old landlord in small claims court to recover your deposit.

Where Can I Find Help?

If you’re a renter facing foreclosure, you don’t have to go through it alone. Here are some resources that can help:

• Colorado Legal Services: Provides free legal assistance to low-income Coloradans.
• Colorado Housing Connects: A free helpline that can connect you with housing resources and legal aid.
• The Colorado Department of Local Affairs (DOLA) – Division of Housing: Offers information on tenant and landlord rights.

Being a renter in a foreclosure situation is tough, but remember that you have rights. By staying informed, communicating, and seeking help when you need it, you can navigate this challenging time and find a stable housing situation.