What Happens to a Lease When the Property is Sold or Foreclosed on?
Authored By: Lagniappe Law Lab
In general, the transfer or sale of a property does not end a lease on that property.
A new purchaser or owner may not be able to evict the tenant if the lease "follows" the purchased property. A lease follows the purchased property if:
- A written lease was recorded in the conveyance (public) records of the parish where the home sits, or
- The lease was "assumed" by the buyer in the act of sale, or
- The new owner "ratifies" an unrecorded lease by allowing the tenant to remain and accepting rent, or
- The new owner is a creditor of the landlord.
Use the tabs above to learn more about the impact a transfer of leased property has on you.
The sale of your home may affect your rights, including your rights to stay in the property.
If you don't have a lease:
If you don't have a lease, your rights as a tenant to stay in your apartment will end with the sale. The new owner should let you stay for at least as long as you have paid for. You and your new owner can make a new agreement. If your new owner accepts rent from you, then you have a new tenancy.
If you recorded your lease:
If you recorded your lease at the local office of the parish recorder, you probably have the right to stay until the end of your lease term. This is because if your lease is recorded, the new owner was on notice of the lease when he chose to buy the property. Read your lease to see if it says anything different. If the new owner tries to evict you, a recorded lease will be a good defense to the lawsuit.
If you did NOT record your lease:
If you did not record your lease, you only have the right to stay until the end of your lease term if your landlord sold the building with a requirement that the new owner acknowledges your lease. Without this requirement, the new owner may have the right to evict you. The new owner must still go through the legal eviction process to evict you.
If the new owner evicts you before the end of your lease term, you may have a damages claim against your old landlord.
Your Rights to Adequate Notice
Even if you are a month-to-month tenant, the new owner must give you at least a 5 day written notice to vacate.
If the new owner accepted rent from you and let you stay for a while, that can be interpreted as an “assumption” of your month-to-month tenancy. If that is the case, the new owner must give you at least 10 days’ notice before the end of the month that he will not be renewing your month-to-month tenancy before filing an eviction.
If you are not out by the end of the notice period, the new owner can file a lawsuit to evict you.
Your Rights to Your Security Deposit
If your building is sold during your lease, your landlord must give your security deposit to the new owner. When the lease ends, the new owner is responsible for the return of your deposit. If the new owner claims he did not get the deposit in the sale, you may have to go after the old owner as well.
Important Note if Your Home was Foreclosed On
Your landlord must notify you within 7 days of service of a notice of seizure by the sheriff’s office. If he fails to do so, you may have the right to sue him for damages and a penalty of $200 under La. R.S. § 9:3260.1.
The Protecting Tenants in Foreclosure Act (12 U.S.C. § 5201) was re-authorized in May of 2018 as part of the omnibus tax law. If you are a tenant in a foreclosed building, the immediate successor in interest (i.e. the bank or the person who bought the property at auction) must allow you to stay for:
- 90 days if the buyer is trying to move into the property
- 90 days if you don’t have a lease, or your lease expired, or
- the remainder of your lease if your lease is not expired.
Note: this law does not protect you if you are the former owner of the house that was sold at auction, or the child, spouse, or parent of the former owner. The tenancy must be an “arm's-length” transaction.
The new owner must give you notice of her ownership and where to pay rent. The new owner must also give you notice before evicting you in accordance with the requirements above and must go through the court eviction process if you do not vacate.
If the new owner evicts your tenant before their lease ends, the tenant may have damages against you.
A lease is a contract between a landlord and tenant(s). By law, landlords are responsible for upholding their end of the lease. If the property is transferred to someone else during the lease term and the new owner evicts the tenant, the landlord has broken the lease. As a result, the landlord may face damages for violating the lease contract.
Additionally, if you took a security deposit, be sure to deliver it to the new owner at the time of sale. Otherwise, the tenant may be able to file a suit against you for the value of their security deposit.
If you buy a property that has a recorded lease with a tenant, you step into the shoes of the original landlord. One exception is when the lease says otherwise. Buyers are subject to the same obligations and benefits under the lease. This is true when you buy the property directly from the original landlord owner or at a tax sale. A buyer cannot take possession of the property until the lease term ends or the lease terminates under the terms of the lease. But, a buyer is entitled to all rents that are still owed under the lease.
If the lease on the property was not recorded, you are not bound by the lease. The tenant (lessee) may seek relief from the previous landlord, but you are within your rights to take possession of the property. A new owner can ratify an unrecorded lease by allowing the tenant to remain and accepting rent. The new owner must give the tenant at least a 5 day written notice to vacate if the new owner does not wish to ratify the tenant's lease. If the tenant remains, the new owner can file a rule for possession against them. Since the new owner has no contractual agreement with the former tenant, the law considers them an "occupant."