You qualify as a bona fide tenant under the Protecting Tenants at Foreclosure Act (PTFA) when three tests all hold. You signed at arm's length, you pay near fair market rent, and you are not the borrower or the borrower's child, spouse, or parent. PTFA is the federal law that sets notice and lease rights for renters after a foreclosure sale. For readers tracking settlements, bona fide status decides who can invoke those protections in a state-law wrongful-eviction claim.
Official resources:
- Read the official notice from Federalreserve — Use this primary source to verify the official announcement.
- Read the official guidance from Fdic — Use this primary source to verify the official guidance.
Table of Contents
- Do you pass the three-part test?
- Does low rent or a voucher end your claim?
- What rights follow bona fide status?
- Can you sue directly under PTFA?
- What papers prove you qualify?
Do you pass the three-part test?
The FDIC lists three tests in its compliance manual. You must not be the borrower or the borrower's child, spouse, or parent. The lease must come from an arm's-length deal.
The rent must not sit far below fair market value. An unrelated renter with a standard lease and market rent will often pass. A borrower's spouse living under a sweetheart lease will not. A side deal with token rent also fails the rent test.
- Not the owner-borrower and not their child, spouse, or parent
- Signed through an arm's-length negotiation, not a family favor
- Paying rent at or near market level, unless a public subsidy lowers it
Does low rent or a voucher end your claim?
The FDIC states low rent still counts as bona fide when a federal, state, or local subsidy lowers it. The FDIC also states PTFA expressly covers tenants aided under Section 8 of the U.S. Housing Act of 1937.
So a voucher alone does not defeat bona fide status. Compare the lease rent to the subsidy paperwork, not to neighbor rents alone. Keep the housing-authority letter that shows the subsidy source and amount. A private discount without a public program still risks failing the market-rent test.
What rights follow bona fide status?
The Federal Reserve explains the rule in its 2018 restoration guidance. An immediate successor after foreclosure must give every bona fide tenant at least 90 days' notice before eviction. Bona fide tenants with unexpired leases may stay until the lease ends.
The exception is sale to a buyer who will live in the unit. That buyer can end the lease on 90 days' notice. Save the foreclosure notice, the new-owner notice, and your lease to date each period.
Can you sue directly under PTFA?
Orrick reported the Sixth Circuit rule in the February 2014 report. Tenants cannot sue under PTFA alone. They may use a PTFA violation to prove a state-law wrongful-eviction claim. The Ninth Circuit reached the same no-direct-suit result in Logan v. U.S.
Bank on July 16, 2013. Congress made PTFA permanent through P.L. 115-174, S.2155, signed May 24, 2018, after its 2014 expiration and 2018 restoration, according to the Congress record for S.2155. That timing matters because later foreclosures fall under the current federal baseline. Check whether your state adds longer notice or broader coverage.
What papers prove you qualify?
Gather the signed lease, rent receipts or bank records, and proof of who negotiated the lease. Add subsidy letters, inspection forms, or payment records if public aid lowers the rent. Keep any notice that names the foreclosure date and the new owner.
Match names and dates across papers before you contact a lawyer or file a claim. Flag family ties to the borrower, missing leases, cash-only rent, and gaps in payment proof. Save every eviction notice and envelope to show when the 90-day clock started.