The Protecting Tenants at Foreclosure Act

 Background 

The Protecting Tenants at Foreclosure Act of 2009 became effective on May 20, 2009. This new law protects tenants from immediate eviction by persons or entities that become owners of residential property through the foreclosure process and extends additional protections for tenants with U.S. Department of Housing and Urban Development Section 8 vouchers.2  The law is self-executing; no federal agency has authority to issue regulations implementing the law or to interpret the law. The law was originally set to expire on December 31, 2012 but The Dodd–Frank Wall Street Reform and Consumer Protection Act revised the Tenants Protection Act by adding a definition for the date of a notice of foreclosure and by extending its expiration date to December 31, 2014.

The fundamental purpose of the Protecting Tenants at Foreclosure Act is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing. To that end, the law establishes a minimum time period that a tenant can remain in a foreclosed property before eviction. The law does not affect any state or local law that provides longer time periods or other additional protections for tenants.

 

Definitions

Bona Fide Lease or Tenancy 

A lease or tenancy is bona fide if the tenant is not the mortgagor or the parent, spouse, or child of the mortgagor; the lease or tenancy is the result of an arms-length transaction; and the lease or tenancy requires rent that is not substantially lower than fair market rent or is reduced or subsidized due to a federal, state, or local subsidy.

 

Requirements

Under the law, the immediate successor in interest at foreclosure must (a) provide bona fide tenants with 90 days notice prior to eviction and (b) allow bona fide tenants with leases to occupy property until the end of the lease term, except the lease can be terminated on 90 days notice if the unit is sold to a purchaser who will occupy the property.

1. Title VII of the Helping Families Save Their Homes Act of 2009. Public Law 111-22, effective May 20, 2009 (www.gpo.gov/fdsys/pkg/PLAW-111publ22/pdf/PLAW-111publ22.pdf). 2. www.gpo.gov/fdsys/pkg/FR-2009-06-24/pdf/E9-14909.pdf

and www.hud .gov/offices/pih/programs/hcv/about/fact_sheet.cfm#6

 

Comments (2)

  1. robert spakowski

    Will this law will be extrended after December 31, 2012 ?

    1. kgontarski (Post author)

      Hi Robert,

      Thank you for your question “Will this law will be extended after December 31, 2012 ?” on our blog post.

      Yes, the law will be extended and we will update the blog article. Thank you for asking a question that helped us improve our post!

      The Dodd–Frank Wall Street Reform and Consumer Protection Act revised the Tenants Protection Act by adding a definition for the date of a notice of foreclosure and by extending its expiration date to December 31, 2014.

      You can view more info here on the revisions to the law:

      http://www.occ.gov/news-issuances/bulletins/2011/bulletin-2011-15.html

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