We are not aware of any laws that govern the notice a lender must provide to a tenant when it takes ownership of a rental property through a deed in lieu agreement. Consequently, we recommend reviewing your deed in lieu agreement and any related documents — such as the tenant’s lease — to determine your obligations, if any, related to providing notice of the change in ownership.

The Illinois Mortgage Foreclosure Law dictates the timing and form of notice that must be provided to occupants of dwelling units when title to property is obtained through a judicial foreclosure proceeding. Although these provisions are not applicable to a deed in lieu of foreclosure, they may be useful in determining what information should be included in the notice to the tenant if your deed in lieu documents are silent as to what is required.

You may wish to include in the notice to the tenant: (1) a statement that your bank is now the owner of the property, (2) instructions on the method of payment of future rent, (3) the name and contact information for the individual or entity whom the tenant should contact with concerns about the property or to request repairs of the property, and (4) a statement that the tenant is not being asked to vacate the premises.

For resources related to our guidance, please see:

• Illinois Mortgage Foreclosure Law, 735 ILCs 5/15-1401 (“The mortgagor and mortgagee may agree on a termination of the mortgagor's interest in the mortgaged real estate after a default by a mortgagor. Any mortgagee or mortgagee's nominee may accept a deed from the mortgagor in lieu of foreclosure subject to any other claims or liens affecting the real estate. Acceptance of a deed in lieu of foreclosure shall relieve from personal liability all persons who may owe payment or the performance of other obligations secured by the mortgage, including guarantors of such indebtedness or obligations, except to the extent a person agrees not to be relieved in an instrument executed contemporaneously. A deed in lieu of foreclosure, whether to the mortgagee or mortgagee's nominee, shall not effect a merger of the mortgagee's interest as mortgagee and the mortgagee's interest derived from the deed in lieu of foreclosure. The mere tender of an executed deed by the mortgagor or the recording of a deed by the mortgagor to the mortgagee shall not constitute acceptance by the mortgagee of a deed in lieu of foreclosure.”)

• Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1508.5(a) (“The holder of the certificate of sale or deed issued pursuant to that certificate or, if no certificate or deed was issued, the purchaser, shall: . . . (2) following the order confirming sale under Section 15-1508, but no later than 21 days after the order confirming sale, notify all known occupants of dwelling units of the mortgaged real estate that the holder or purchaser has acquired the mortgaged real estate. The notice shall be in writing and shall:

(i) identify the occupant being served by the name known to the holder or purchaser;

(ii) inform the occupant that the mortgaged real estate at which the dwelling unit is located is the subject of a foreclosure and that control of the mortgaged real estate has changed;

(iii) provide the name, address, and telephone number of an individual or entity whom the occupants may contact with concerns about the mortgaged real estate or to request repairs of that property;

(iv) include the following language, or language that is substantially similar: ‘This is NOT a notice to vacate the premises. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights that you may have.’;

(v) include the name of the case, the case number, and the court where the order confirming the sale has been entered; and

(vi) provide instructions on the method of payment of future rent, if applicable.”)